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Nifty : 20268

Technical Outlook

* The index started the truncated week on a positive note and gradually inched northward as the week progressed. As a result, weekly price action formed a sizable bull candle carrying higher low, indicating acceleration of upward momentum

* Nifty staged a resolute breakout from four-months consolidation (20200-19000), highlighting resumption of uptrend. Further we believe, outcome of Assembly election would boost the market sentiment and lead to an acceleration of upward momentum towards 21000 in coming weeks as it is price parity of Jun-Dec 2022 rally (15183-18887) projected from Mar-23 low of 16828. In the process, bouts of volatility would offer incremental buying opportunity. Hence, any temporary breather should be utilized as incremental buying opportunity wherein immediate support is placed at 19800. Our positive bias is further validated by following observations:

* A) Bank Nifty which carries 35% weightage in the Nifty has logged a breakout from an inverted head and shoulder pattern, indicating rejuvenation of upward momentum

* B) Percentage of stocks above 50day ema jumped from 25% at end of October to ~80% as on date indicating broad based participation in current breakout

* C) FII turned net buyers for November after two-month hiatus. This would help accelerate rally along with robust DII flows

* D) Brent prices remained flattish despite Opec+ indicating extended output cut. Also decline in Dollar index to 103 is supportive of inflows to emerging markets and India

* Sectorally, BFSI, PSU to accelerate outperformance while Auto, Power, Capital goods to endure its northbound journey. Metals and large cap IT provide favourable risk-reward

* On the stock front, in large cap we prefer GAIL, NTPC, SBI, LTIM, Adani Port, L&T, Tata Steel, Sun Pharma while in midcaps Bank of India, HEG, Gujarat Industrial Power, Engineers India, VTL, Century Ply, CESC, FSL, NHPC, Endurance Tech are looking good

* The formation of higher peak and trough signifies elevated buying demand that makes us confident to revise support base at 19800 as its is confluence of 50% retracement of past three weeks rally (19414-20291) coincided with 20 days EMA placed at 19765 and last week’s low of 19800

Nifty Bank: 44814

Technical Outlook

* The price action formed a strong bull candle that led index to close at 10 week highs as momentum accelerated after breakout from bullish head and shoulder pattern . Further the election verdict of assembly election would support the positive sentiment in coming week

* We expect index to gain further ground and challenge its life highs of 46300 in December 2023 while key short term support is now being revised upwards towards 44000 as it is the low of Wednesdays strong bull candle

* Structurally, key observation has been that, since covid lows, index held 52 -week ema (42700 ) on three occasions, followed by new high in each case in subsequent quarter . We expect same rhythm to be maintained and therefore expect index to challenge and surpass life highs .

* Index has undergone healthy retracement of March to July rally while pricing in various negatives in the process . Index retraced 18 week rally by 50 % over 19 weeks indicating shallow nature of retracement that augurs well for structural upmove

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