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Nifty : 24368

Technical Outlook

Week that was…

Equity benchmarks extended losses over second consecutive week led by global volatility amid concerns over liquidity. Nifty settled week at 24368, down 1.4%. Broader market performed in tandem with 1.3% and 2% cut, respectively. Sectorally, pharma, FMCG outshone while metal, PSU Banks underperform

Technical Outlook:

* The index witnessed a gap down opening (24717-24302) and gradually consolidated in a narrow range of 24400- 23900 throughout the week. The weekly price action resulted into doji like candle, indicating elevated volatility wherein supportive efforts that emerged from 50 days EMA

* In the upcoming truncated week, Nifty holding last week’s low of 23800, despite volatility, will lead to consolidation in 24400-23800 range. Markets would await for direction from global markets coupled with India and US inflation data. Only a sustained follow through above Doji high of 24400 would lead to extended pullback towards 24700 in coming weeks. Traders should note that, intermediate correction is a part of structural up move which offers incremental buying opportunity

* A)Structurally, key point to highlight is that since Oct-2023 Nifty has not corrected for more than 2 weeks wherein intermediate correction have been limited to 5%. In the current scenario as well, we expect index to maintain same rhythm and stage a pullback as Nifty has already corrected 5% over past 2 weeks

* B)India VIX is key monitorable from risk perspective. VIX has cooled down significantly from resistance zone of 23 indicating lower risk perception in short term

* C) Globally, Nikkei and US indices have also bounced from oversold readings and expected to consolidate

* The formation of lower high-low on the weekly chart makes us revise support at 23800 as it is confluence of 20 days EMA coincided with last week’s low

Nifty Bank : 50484

Technical Outlook

Week that was :

Nifty Bank closed the week 1 . 7 % or 866 points lower at 50484 post RBI policy on Thursday . NiftyPSU Bank index was down 3 % for the week .

Technical Outlook :

* The Index started the week with gap down opening (50747-51088) and there after consolidated throughout the week in Monday candle range (50747 -49660 ) . In the process index held its rising 100 day ema around 49600 for fifth session amid oversold reading of 11 on daily stochastics . Price action formed is a Hammer like candle on weekly indicating supportive efforts at lower levels

* Going forward, key resistance is placed now at 51300 levels which is Mondays bearish gap area and value of down ward slopping trendline drawn from life highs . Further, a decisive breach of short term support of 49600 would indicate extended correction in coming sessions towards 48500 which is confluence of a) 61 . 8 % retracement of post election rally and b) value of rising 200 -day ema (48200 )

* 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 22 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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