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Nifty : 19047

Technical Outlook

• The index started the truncated week on a negative note and drifted towards 200 days EMA, contrary to our view. As a result, weekly price action formed a bear candle carrying lower high-low, highlighting extended correction. Markets witnessed capitulation last week leading prices into extreme oversold zone.

• Going ahead, we expect Nifty to witness technical pullback from oversold readings and gradually head towards 19450 in the short term as it is 61.8% retracement of last leg of decline (19850-18838). In the upcoming week, elevated volatility can not be ruled out owing to US Fed meet in which holding 18700 would keep pullback options open

• Structurally, broader markets have undergone healthy retracement wherein >75% percentage of stocks (Nifty 500 Universe) are trading above 200-day ema in October against March23 reading <40%, indicating shallow nature of profit taking amid robust price structure

• Sectorally, we expect oversold sectors like BFSI, Infra, PSU are likely to see a technical pullback while auto would endure its relative outperformance

• On the stock front, in large cap we prefer SBI, Axis Bank , HCL Tech, L&T, Maruti, NTPC, HAL, GAIL while in midcaps Canara Bank, Engineers India, Star Cement, KPR Mills, L&T Finance, Sonata Software, Persistent System, AIA engineering are looking good

• The formation of lower peak and trough amid global volatility makes us revise the support base downward for the Nifty at 18700 zone as it is confluence of 52 weeks EMA coincided with previous swing high of 18887 which would now act as key support as per change of polarity concept

Nifty Bank: 42782

Technical Outlook

• The price action for the week formed sizeable bear candle with lower shadow indicating late recovery after panic selling as supportive efforts emerged from oversold trajectory . Index continued lower high -low formation on weekly time frame for sixth week in a row, in the process correcting 9 . 5 % from life highs leading weekly and daily stochastics into extreme oversold readings of 10 and 7 respectively . Index needs to show follow through strength above Friday’s high to indicate meaningful pull back else retest of supports near 41800 cannot be ruled out

• Going forward, we expect supportive efforts to emergee near key support of i41800 -41500 zone and index to pose gradual recovery towards last week’s high of 43800 which remains key hurdle . Key support is placed at 41500 -41800 levels as confluence of :

• 61 . 8 % retracement of entire rally from March 2023 (38613 -46369),

• value of rising 52 -week ema which has been held on couple of occasions since CY2020 currently at 42700 (transitory breach usually is sign of capitulation)

• Structurally, Index is in the process of undergoing a retracement of March to July rally over while pricing in various negatives in the process . We believe current decline would lead to a strong higher base formation that would set the base formation for next leg of structural up trend

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