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Nifty :23454

Technical Outlook

Day that was…

Equity benchmark extended its losing streak over seventh session in a row tracking subdued global cues coupled with FII’s persistent sell-off. Nifty lost 0.3% to settle the Monday’s session at 23454, down 79 points or 0.35%. Broader market remained in favour of declines with A/D ratio of 1:1.7. Sectorally, Metal, FMCG, Auto remained in limelight while IT, pharma, Oil & gas extended breather

Technical Outlook:

* The index started the truncated week on a subdued note and traded with a corrective bias throughout the day. As a result, The, daily price action formed a bear candle carrying lower high-low, indicating extended correction amid elevated volatility. In the process, Nifty midcap index relatively outperformed and remained unchanged

* The index has closed below its 200 days EMA for the first time since Apr-23, indicating extended correction going ahead. Further, we believe, amidst ongoing volatility supportive efforts can be seen around key support zone of 23200-22900 as it is 52 weeks EMA coincided with election outcome day high. Meanwhile, for a meaningful pullback to materialise, index need to decisively close above previous sessions high which has not been the case in recent past

* On the structural front, all major indices including Nifty, Bank Nifty, Midcap, Small Cap have been hovering around their 200 days EMA amid oversold conditions. Over past two years, on multiple occasions, mean reversion towards 200 days EMA resulted into technical pullback

* The breadth indicator (% of stocks above 50 days SMA of Nifty 500 Universe) has bounced from bearish extreme level of 12 during last week. Since covid lows, such an extreme reading leads to short term reversal

* On the global marco front, pullbacks in Brent prices were short lived amid slowdown in demand and possible rise in production. A decisive close below 69 would result into extended correction towards 65 mark going ahead

* Structurally, since covid lows, average intermediate bull market corrections have been to the tune of 10% in Nifty and 9% in Bank Nifty. With 10% correction in Nifty and 8% correction Bank Nifty is already in place with positive divergence in Bank Nifty, we believe price wise correction remains limited however, index can undergo time wise correction with key support in the range of 23200-22900 as it is confluence of: A) 61.8% retracement of Jun-Sept rally (21281-26277), placed at 23200 B) Long term rising trend line that has been held over past 2 years C) 52 weeks EMA is placed at 23146

Nifty Bank : 50364

Technical Outlook

Day that was :

Index witnessed rangebound activity and settled the volatile session on a flat to positive note at 50364 , up 0 . 4 % . The PSU Banking index snapped 3 sessions decline and settled with a gain of 0 .65 % at 6535

Technical Outlook :

* The index started the week on a subdued note . However, staged a strong comeback in the second half of the session that helped index to settle on a positive note . As a result, daily price action formed an inside bar, indicating pause in downward momentum .

* The index has been taking breather above 200 days EMA that coincided with the lower band of past 6 weeks consolidation around 50200 coupled with key long -term rising trend line (that has been held over past 2 years) . Meanwhile, daily RSI oscillator is witnessing positive divergence, highlighting impending pullback .

* Going ahead, for a meaningful pullback to materialize, index need to decisively close above past two sessions high of 50560 . Further, failure to hold 200 days EMA (placed at 49900 ) would lead to extended correction towards 49300 being 52 weeks EMA

* Structurally, since July -23 , on 4 occasions Bank Nifty has maintained the rhythm of not correcting > 9 % and subsequently undergone base formation for next 3 - 4 weeks before unfolding next leg of up move . In current scenario, with ~ 8 % correction already in place, we expect Bank Nifty to maintain the same rhythm and stage bounce in coming sessions

* The PSU bank index formed a long legged Doji candle, indicating breather after recent decline . We expect, PSU Bank index to hold October low of 6188 and gradually form a higher base

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