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Nifty : 21731

Technical Outlook

Week that was…

Equity benchmark recouped last week’s losses and clocked a fresh All time high of 21801. The Nifty settled the truncated week at 21731, up 1.8%. Broader market performed in tandem with the benchmark as Nifty Midcap and Small cap concluded the week with ~2% gains. Sectorally, barring IT, all other indices ended in green led by auto, metal, Oil & Gas, FMCG Technical Outlook

• The index started the truncated week on a positive note and gradually inched northward as the week progressed. The weekly price action formed a bull candle carrying higher highlow, indicating continuation of upward momentum.

• The formation of higher peak and trough supported by improving market breadth makes us confident to reiterate our positive bias and expect Nifty to gradually head towards 22000 in coming weeks. Key point to highlight is that, % of stocks above 200 days EMA have surpassed 90% mark indicating overbought conditions. However, we expect positive momentum would continue as long as index maintains higher high-low on weekly chart. Hence, any breather should not be construed as negative instead it should be capitalised as incremental buying opportunity in quality stocks as strong support is revised to 21300. Our positive bias is further validated by following observations:

• A) Revival of upward momentum in the financial and IT sector which carries 50% weightage in Nifty provides impetus for extension of ongoing up move

• B) Global market setups becomes more supportive as US and European indices are coming out of two years of consolidation

• C) Declining yields, and stable currency (INR/USD) along with strong institutional flows would act as tailwinds

• Sectorally, BFSI, IT, Metal, Capital goods, Consumption and Pharma sectors are expected remain in focus

• On the stock front, in large cap we prefer Reliance, SBI, TCS, GAIL, Tata Steel, Ashok Leyland while in midcaps Arvind fashion, IRFC, Graphite, Engineers India, Bank of India, Affle India, BEML, Ajanta Pharma, Grindwell Norton, GMR Infra are looking good

• The elongation of rallies followed by shallow retracement exhibits inherent strength that makes us confident to revise support base at 21300 as its is confluence of 61.8% retracement of past six sessions up move (20977-21801) coincided with last week’s low of 21329

Nifty Bank: 48292

Technical Outlook

Week that was :

The Nifty Bank index continued its record setting spree last week amid firm global cues . Index closed the week at 48292 , up 801 points or 1 .66 % . Nifty PSU banks outperformed with 2 . 2 % gains while Nifty private bank index gained 1 . 5 % .

Technical Outlook:

• The price action for the week formed bull candle with minor upper shadow indicating some profit taking on Friday at life highs in run up stocks . Index however maintained higher high -low formation indicating continuation of positive bias • We expect index to gradually head towards 49000 levels in coming weeks . However, taking note of overbought readings (weekly stochastics of 92 ) we do not rule out marginal profit taking, hence recommend to adopt buy on dips strategy

• Meanwhile, we revise short term support to 47000 being last week’s lows that coincide with rising 20 -day ema (46937 )

• Structurally, index formed a higher bottom after strong breakout above 46300 levels in faster time highlighting robust price structure and elevated buying demand . Further, participation of both private/public sector banks make the rally more dependable with large caps being in focus

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