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Nifty : 22493

Technical Outlook

Week that was… Equity benchmarks concluded truncated week on a positive note on expected lines wherein Nifty recorded new high of 22525. The Nifty gained 0.5% to settle the week at 22493. However, broader market relatively underperformed over second consecutive week as Nifty midcap and small cap lost 0.4% and 2.85%, respectively. Sectorally, financials, pharma, PSU outshone while IT, realty underperformed

Technical Outlook

• Nifty started the week on a flat note and subsequently gained momentum as the week progressed. Consequently, weekly price action formed a bull candle carrying higher high-low, indicating continuance of positive momentum. Meanwhile, broader market underperformed on expected lines.

• The formation of higher peak and trough on the weekly chart signifies buying demand at elevated support base that makes us reiterate our positive bias and expect Nifty to head towards 22700 in coming week’s. In line with our view, we expect large caps to continued with its relative outperformance against the broader market as ratio of Nifty vs Nifty 500 has bottomed out. Thus, bouts of volatility owing to global development should be utilized as an incremental buying opportunity since immediate support is placed at 22200. Our positive bias is further validated by following observations:

• A) The Bank Nifty has witnessed a follow through strength post faster pace of retracement while Nifty IT witnessed supportive efforts from 50 days EMA (cumulatively Banking and IT carries 50% weightage in Nifty) that bodes well for next leg of up move

• B) buoyancy in global equities with steady domestic and foreign flow would act as tailwind for domestic equities

• C) The cool off in oil prices and Dollar index are likely to act as tailwind

• The market breadth is declining which is a sign of mean reversion in mid/small cap stocks from over bought trajectory. Mid and small cap indices have rallied ~35% since October 2023. Intermediate corrections to the tune of average 12% in Mid and small caps have been a bull market norm. At present 8% correction is behind us

• On the sectoral front, BFSI expected to lead the rally well supported by IT, metal, auto, capital goods

• On the stock front, in large cap we prefer TCS, Axis Bank, SBI, Tata Steel, NTPC, Titan, HAL, Ambuja Cement, Havells, Shriram Finance while in midcaps Graphite, Delhivery, Glenmark Pharma, Exide, Coforge, PNB, BEL, Vguard, Castrol India are looking good

• Structurally, formation of higher high-low on the weekly chart signifies elevated buying demand that makes us to revise support base at 22200 as it is confluence of:

• Thursday’s panic low is placed at 22224

• 20 days EMA is placed at 22165

Nifty Bank: 47836

Technical Outlook

Week that was : The Nifty Bank extended its winning streak for fourth successive week supported by strong GDP growth numbers and Indian bonds being included in Bloomberg index from next year . PSU bank index outperformed with gain of 3 % to record fresh high . Index gained 539 points or 1 .14 % to close at 47836 for the week

Technical Outlook

•The Index started the truncated week on a muted note and gained on three out of four sessions to inch closer to life highs . PSU and private banks both contributed to gains during the week leading to formation of bull candlee on weekly time frame with higher high -low indicating continuation of positive bias . In the process index filled the falling gap of 17th January and inched closer to life highs

• Going forward, we reiterate our positive stance on index and expect it to challenge life highs of 48600 levels in the coming week . However, some bouts of volatility near life highs due to overbought readings on daily time fram e cannot be ruled out . Use such volatility as buying opportunity with focus on large banks

• Meanwhile, we have upgraded short term support to 46900 levels which is confluence of 50 % retracement of past six session rally that coincides with rising 20 -day ema

• Structurally it is worth noting that each time Index has a tendency to challenge and surpass life highs after a base formation near rising 52 -week EMA . In current context index has already formed a strong base near 44600 levels . We expect index to maintain its rhythm and challenge life highs of 48636 in coming weeks

• Meanwhile, PSU bank index has hit fresh life high and expected to continue its relative outperformance on relative basis

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