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Nifty : 26178

Technical Outlook

Day that was..

The equity benchmark extended record setting spree over third consecutive week aided by Chinese stimulus wherein large caps relatively outperformed the broader market. Nifty gained 1.5% to settle the week at 26200. Sectorally, metal, auto, PSU remained in limelight throughout the week while private banks took a breather after recent sharp up move

Technical Outlook:

* The index started the week on a buoyant note and gradually accelerated upward momentum as the week progressed. The weekly price action resulted into bull candle carrying higher high-low, indicating continuation of positive momentum.

* In the upcoming truncated week, we expect markets to consolidate in the 25800 and 26500 range with stock specific action in focus as earnings cues would kick in which would provide further directional bias. Key point to highlight is that, past 3 weeks Nifty has rallied >1500 points that hauled daily stochastic oscillator in overbought territory (placed at 91), indicating possibility of temporary breather at higher levels can not be ruled out. Only a decisive close below previous session low would result into pause in upward momentum till then continuation of upward momentum. Our positive bias is further validated by following observations:

* a) The sturdy price structure of Banking and IT (which carries 50% weightage in Nifty) stocks signifies that broader positive structure remains intact. Meanwhile, recently underperformed Metal index has seen rejuvenation of upward momentum as it has given a breakout from four-month trading range with faster pace of retracement backed by rally in base metals aided by Chinese stimulus.

* b) Brent prices declined sharply as supply sides concerns have eased and crude prices are expected to remain under pressure with downside target of 67-65 levels. Falling crude oil prices usually have inverse correlation with the domestic market

* Sectorally, we expect PSU banks, IT, Metals to remain in focus. Declining yields and recent correction would act as catalyst for PSU banks

* The buying demand at elevated support base highlight inherent strength that makes us revise support base at psychological mark of 25800 as it is 38.2% retracement of recent up move (24753-26277) coincided with last weeks low of 25847

Nifty Bank : 53834

Technical Outlook

Day that was :

Nifty Bank index succumbed 1 % on Friday amid profit taking in large private banks, thereby almost erasing entire weeks gains . Index closed at 53834 , down 541 points

Technical Outlook:

* The Index opened flattish and failed to surpass Thursdays high . As the session progressed, index continued to decline till fag end of the session and resulted in a bear candle that engulfed previous four session trading range, indicating slowdown in upward momentum and extended consolidation ahead as index closed below previous session low for first time in 14 sessions

* Going forward, Q 2FY25 earnings cues would dictate directional bias while price action indicates consolidation in the range of 52800 – 54800 in coming week . Last weeks high (54467 ) and 138 . 2 % retracement of the recent correction (53357 -49727 ) placed at 54800 would act as short term hurdle . Meanwhile, short term support is placed at 52800 that is confluence of 38 . 2 % retracement of last two week rally and rising 20 -day ema

* PSU banks are expected to attract buying demand near their long term mean . Apart from technical oversold conditions, potential of lower interest rates are expected to act as tailwind for PSU banks .

* Price structure : Current up leg in Bank Nifty is of higher magnitude (50369 -54467 ) as compared to previous up leg (49654 -51750 ) indicating improving price structure and corroborates bullish view

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