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Nifty : 20133

Technical Outlook

* The index started the week with a pause after three weeks of gains ahead of key US Fed policy meet outcome . Price action resulted in a small bear candle with lower high-low indicating marginal profit booking in overbought zone

* The breakout from seven week consolidation 19991-19230 signifies rejuvenation of upward momentum that makes us believe index will extend ongoing up move towards 20400 in upcoming truncated week. The index has witnessed faster pace of retracement, indicating robust price structure. However, past 11 sessions 5% move pulled daily stochastic oscillator in overbought territory (placed at 92), indicating couple of days breather can not be ruled out which would make market healthy. Thus, any dip from hereon should be capitalized as incremental buying opportunity to ride next leg of up move

* On the broader market front, Midcap index has rallied >40% over past six months and currently undergoing a healthy retracement. In a secular bull market secondary correction is a common phenomenon wherein historically 8-10% corrections in midcap index provided incremental buying opportunity. Therefore, temporary breather should be utilised to construct a quality midcap portfolio from medium term perspective

* The formation of higher peak an trough supported across sector participation makes us confident to revise support base at 19600 as it is confluence of:

* a) 50% retracement of current up move (19223-20008), at 19615

* b) Earlier resistance of 19600 will now act as support as per change of polarity concept

* c) 20 days EMA is placed at 19684

Nifty Bank: 45979

Technical Outlook

* The price action for the day formed a small bear candle after two consecutive high wave candle indicating slowdown in momentum and marginal profit booking near life highs

* Going forward, we expect index to gradually head towards 46600 over next few weeks where current rally from august lows of 43600 would find equality with June -July rally (43345 -46369 ) . Intermittent dips would offer buying opportunity with key support at current week highs at 45200 -45000

* Our view is backed by following key observations

* Key immediate support is at current week low of 45200 that coincides with 20 day ema placed at 45000

* PSU banks index has given a breakout from decadal range indicating structural turnaround and expected to outperform

* Private banks with significant weightage are oversold and at key supports . Expect them to bounce back which will lift banking index higher

* PSU Banking index is expected to continue its relative outperformance as index has recently concluded breakout from multi year highs 

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