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Nifty : 24823

Technical Outlook

Day that was…

Equity benchmarks extended gains over second consecutive week, in tandem with global cues. Nifty concluded the week at 24823, up 1.2%. Broader market relatively outperformed as Nifty small cap gained 3.5%.

Technical Outlook:

* The index started the week on an optimistic note and remained positive on all five sessions. Consequently, weekly price action formed a bull candle carrying higher high-low, indicating continuation upward momentum

* In the coming week, rising prospects of US rate cut and monthly expiry would influence directional bias. The formation of higher high-low supported by sectoral rotation signifies elevated buying demand. Going ahead, we expect Nifty to trade with a positive bias in the broader range of 25200-24400 with global cues providing directional bias. In the process, stock specific action would prevail. Hence, buying on dips would be the prudent strategy to adopt as strong support is placed at 24400.

* Our positive bias is further validated by following evidences:

* A) Despite global volatility, Index has maintained its rhythm of not correcting more than 5% (pricewise) and two weeks (time wise) since beginning of CY24. Post such price/time correction Nifty has tendency to surpass life highs in each of the four instances

* B) Bank Nifty has managed to close above past two weeks high of 50800, indicating pause in downward momentum. Going ahead, follow through strength in Banking stocks would drive Nifty higher as Bank Nifty carries 32% weightage in Nifty

* C) The current up move is backed by improvement in market breadth as currently ~60% stocks of Nifty 500 universe are trading above their 50 days Average compared to last week’s reading of 48%

* D) Global headline indices, led by US are in steady uptrend and S&P 500 remains within 1% of life highs. Firm global cues act as cushion

* On the sectoral front, Consumption, IT, Pharma to outperform while PSU banks, Metal and Capital goods companies provide decent reward-risk proposition after recent corrective phase

* The broader market has undergone healthy retracement as Nifty Midcap and small cap have formed a higher base formation above 50 days EMA that has set the stage to challenge All Time High. Thus, focus should be on quality stocks with strong earnings

* The formation of higher high-low on the weekly chart makes us revise support base at 24400 as it is confluence of 20 days EMA coincided with 61.8% retracement of ongoing up move (24100-24867

Nifty Bank : 50933

Technical Outlook

Day that was :

NiftyBank gained during the choppy trading week helped by some value buying in private/public banks . Index gained 400 points or 0 .85 % to close at 50933

Technical Outlook

* The Index started Fridays session on a muted note ahead of US Fed’s symposium and formed higher high -low on weekly time frame, indicating positive bias . In the process index held above past two week highs around 50800 levels, which coincides with 50day ema .

* Going ahead, we expect index to gradually head towards 51800 levels, and recommend buy on dips strategy . Meanwhile, medium term support for index is placed at 49650 which is confluence of a) 50 % retracement of post election rally and b) value of rising 100 -day ema c) August month low

* Price structure : A) We observe that index is undergoing healthy retracement from overbought readings after 15 % rally . Currently, index has retraced, post election, 21 session rally by 50 % over 30 sessions, indicating corrective nature of decline and would lead into higher bottom formation

* B) Since beginning of 2024 , after each 15 % rally index has a tendency to correct around 8 - 9 % from highs and in current context 7 % decline is done . Hence going by historical rhythm further correction cannot be ruled out which would eventually result into a higher bottom formation around 200 -day ema around 48500 levels

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