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Nifty : 25128

Technical Outlook

Day that was…

The index started the session on a buoyant note tracking firm global cues. Nifty settled Monday’s session at 25128, up 164 points or 0.65%. Broader market performed in tandem with the benchmark. Sectorally, financials, IT, realty outshone while metal, oil & gas took a breather

Technical Outlook:

* The index started the week on a positive note and gradually inched upward as the day progressed. As a result, daily price action formed a sizable bull candle carrying higher high-low formation, indicating positive bias

* The index has been undergoing higher base formation above 50 days EMA over past five session, highlighting inherent strength that makes us believe, index would trade with a positive bias and gradually head towards upper band of consolidation placed at 25000. In the process strong support is placed at which we expect to hold. In the process, stock specific action would prevail onset of the earning season.

* We believe, index heavy weights would be in focus as stocks carrying >35% weightage in Nifty are coming out with Q2FY25 earnings which would dictate further trend of the market along with geopolitical development

* Structurally, on expected lines, supportive efforts emerged in Nifty from 50 days EMA after 6% correction. In CY24, on five occasions, after 5-6% correction index has a tendency to form a base in the vicinity of 50 days EMA for next couple of weeks and set the stage for next leg of up move. In the current context, we expect Nifty to maintain this rhythm and hold the key support of 24700 on a closing basis that is based on following observations:

* a)61.8% retracement of Aug-Sept rally (23894-26277), placed at 24800

* b)Last month’s low is placed at 24753

* Crude oil price retreated after facing stiff resistance in 80-82 zone as fears of supply disruptions from the conflict between Israel and Iran appears to be easing out. We expect, crude to consolidate in 75-82 range

Nifty Bank : 51817

Technical Outlook

Day that was :

Nifty Bank regained upward momentum and settled Monday’s session on a positive note as 51816 , up 1 .25 % . In the process, PSU Bank index relatively underperformed by gaining 0 . 4 %

Technical Outlook :

* The index started the week on optimistic note as intraday dips were bought into . As a result, daily price action resulted into bull candle, indicating continuation of positive momentum .

* The follow through strength to weekly hammer like candle that formed above 100 days EMA indicates conclusion of corrective bias that would open the door for next leg of up move .

* Going ahead, we expect Bank Nifty to hold the key support of 49700 and stage a pullback towards 52400 . Structurally, the BankNifty has once again respected the long -term rising trend line held since Oct -23 that coincided with 100 days EMA .

* Key point to highlight is that, since July -23 , on 4 occasions Bank Nifty has maintained the rhythm of not correcting > 9 % and subsequently undergone base formation for next 2 - 3 weeks before unfolding next leg of up move . In current scenario, with 8 % correction already in place, we expect Bank Nifty to form a base and eventually outperform the Nifty as ratio chart of Banknifty/Nifty has found support from cycle lows and now inching upward that makes us believe index would gradually head towards 52400 in coming weeks

* PSU bank index is undergoing base formation in the vicinity of 200 days EMA amid oversold condition . Apart from technical oversold conditions, potential of lower interest rates are expected to act as tailwind for banks

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