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Nifty : 19638

Technical Outlook

• The index started the week on a flat note and underwent rangebound activity above 50 days EMA. Consequently, weekly price action formed a high wave candle, indicating elevated volatility wherein stock specific activity prevailed

• In the upcoming truncated week, we expect Nifty to extend ongoing consolidation in 19400-19800 range amid stock specific action. Further, sustenance above last week high of 19800 would lead to regaining of upward momentum in coming weeks.

• Structurally, secondary correction is transitory in nature and part of the healthy retracement of three week rally (19223-20222). Thus, dips should not be construed as negative instead capitalized it accumulate quality stocks ahead of Q2 earning season.

• The formation of higher base in the vicinity of 50 days EMA highlights inherent strength that makes us confident to retain support base at 19400 as it is confluence of: a) a) 80% retracement of current up move (19223-20222), at 19418 b) b) value of rising trendline connecting key swing lows of June and August 2023

• Broader markets represented by Midcap and Small cap indices are currently undergoing healthy consolidation post >40% rally in past six months. Compared to benchmark, the Nifty midcap and small cap indices have been showing immense strength by sustaining above its 20 days EMA. We believe, ongoing time consolidation would set the stage for next leg of up move for the broader market space

• Sectorally, we are positive on BFSI, Auto, Pharma, Power and PSU baskets

• On stock front, in large cap we prefer SBI, Axis Bank, NTPC, Tata Motors, Hindalco, L&T, Sun Pharma while in midcaps Union Bank, L&T Finance, NHPC, Deepak Fert, Hindustan copper, Balkrishna Inds, JSW Energy Century Textile looking good 

Nifty Bank: 44584

Technical Outlook

• The price action for the week formed Doji candle indicating pause in downward momentum and supportive efforts near key short term support of 44200 - 44400 band as prices approached oversold territory

• In coming week follow through strength above last week highs of 45000 would lead to extended pull back towards 45500 else consolidation to continue in 44200 - 45000 band wherein PSU banks are expected to endure their relative outperformance

• Structurally , Index has retraced past four week rally by 61 . 8 % over nine sessions leading . Lack of faster retracement on either side indicate extended consolidation

• Our view is backed by following key observations

• On higher degree, index is consolidating in a broad range of 43600 -46300 since early August as it is digesting strong rally from March lows of 38613

• PSU banks continue to relatively outperform and could lend some support at lower levels

• Heavy weight private banks including HDFC bank are now oversold and back to their key supports thereby projecting limited downside

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