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Nifty: 21352

Technical Outlook

Week that was…

Indian equity benchmarks extended declines over second consecutive week. As a result, index lagged global peers weighed by consistent selling by foreign institutional investors in heavyweight banks. Nifty settled the week at 21380, down 0.8%. Nifty Midcap index relatively underperformed by losing 1.8% during the week. Sectorally, pharma remained outlier while financials, realty, oil& gas underperformed

Technical Outlook

• The index started the truncated week on a positive note. However, lack of follow through strength resulted into extended correction. Consequently, weekly price action resulted into bear candle carrying lower high-low, indicating prolongation of corrective bias.

• In the upcoming eventful week, we expect volatility to remain high owing to Union Budget, US Fed meet and earnings progression, wherein index would consolidate in a broader range of 22000- 20800 amid positive bias. With past two week’s 4.5% correction, index is entering budget week on a lighter note as the supportive efforts seen from the lower band of consolidation coincided with 50 days EMA. Thus, accumulating quality stocks on dips would be the fruitful strategy to adopt. Our positive bias is further validated by following observations:

• A) Bank Nifty has approached key support threshold of 200 days EMA amid oversold conditions, indicating impending pullback which would fuel the pullback rally in Nifty (as Bank Nifty carries 35% weightage in Nifty)

• B) The rejuvenation of upward momentum in global market signifies firm global cues that would provide impetus to domestic market

• In run up to this year’s interim budget, we expect companies with exposure to rural areas, infrastructure, Capital goods, PSUs, BFSI to remain in focus

• On the stock front, in large cap we prefer Reliance, SBI, Infosys, GAIL, L&T ,Sail, Siemens, Tata power while in midcaps Coforge, MGL, Star Cement, LIC housing Finance, Engineers India, NCC, Bank of India, Auro Pharma, are looking good.

• The formation of lower high-low on the weekly chart signifies pause in upward momentum that would makes us revise support base at 20800 as its is confluence of: A. Price parity of last leg of decline 22124-21285 projected from Tuesday’s high of 21750 B. 38.2% retracement of past two months up move 18838-22124

Nifty Bank: 44866

Technical Outlook

Day that was :

The Nifty Bank extended decline despite late recovery amid expiry of monthly derivative contracts . Nifty Bank index closed at 44866 , down 216 points or 0 .50 %

Technical Outlook :

• The index started the session on a soft note and then was subject to further selling in early part of the session . Sharp recovery of >400 points in last hour of trade helped index to form Bullish Hammer candle as for second session in a row buying demand emerged near key support zone of 44500 -44300 levels as prices approached weekly stochastics of 21 and daily reading of 12 indicating oversold nature of prices . For a meaningful recovery, however, index needs to sustain above Wednesdays high of 45485 levels . On the higher side key resistance for coming week is placed at 46400 , which is value of 50 -day ema

• Going forward, we expect index to find buying support in the 44500 -44300 zone as it is confluence of : • rising 200 day ema (44550 ) • 61 . 8 % retracement of rally (42105 -48636 ) at 44600

• Equality of current decline with July -Oct 2023 decline ( 9 % ) at 44250

• Structurally, index is undergoing a retracement of November – December rally wherein it gained around 15 % over 9 week period . Index has so far retraced 50 % of the rally over past three weeks and expected to further undergo consolidation while PSU banks are exhibiting strength and likely to outperform

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