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Nifty : 24286

Technical Outlook

Day that was…

Equity benchmarks edged higher and settled the Wednesdays session at record close of 24286, up162 points. The market breadth remained positive with A/D ratio of 2:1 as broader market relatively outperformed. Sectorally, all major indices ended in green lead by financials, metal, FMCG

Technical Outlook:

* The index traded in 100 points range after witnessing a gap up opening (24236-24291). As a result, daily price action resulted into doji like candle carrying higher high-low, indicating continuation of up trend

* The formation of higher peak and trough signifies elevated buying demand that makes us reiterate our positive bias and expect Nifty to gradually head towards 24400. However, traders should note that past four week’s sharp rally of 14% has hauled daily and weekly stochastic oscillator in overbought territory (placed at 90 and 96, respectively). Thus, any temporary breather at higher levels should not be construed as negative instead buying dips would be the prudent strategy as immediate support is placed at 23900

* In the month of July, markets will look for further direction from Union Budget announcements, progression of Monsoon and inflation expectations and Q1FY25 earnings. From the seasonality perspective, July has produced positive returns in 80% occasions over past two decades and similar probability of positive returns is observed even in past five election years spanning two decades wherein budget related expectations tend to weigh on sentiments. Average returns for July has been >2%

* Structurally, the formation of higher peak and trough signifies elevated buying demand that makes us revise support base at 23900 as it is 10 days EMA coincided with 38.2% retracement of past eight sessions up move

Nifty Bank: 53089

Technical Outlook

Day that was

Nifty Bank index reclaimed lost ground of past three sessions to hit new highs led by gains in heavyweights . Index closed at 53089 , up 1 .77 % or 921 points

Technical Outlook :

* The index opened on a positive note and then consolidated after first hour gains near life highs as stock specific action broadened to smaller private banks . Price action formed small bodied bull candle as prices recouped past three session decline indicating continuation of positive trend despite overbought readings . While overall structure remains positive, we believe action will now shift to smaller banks and PSU banking basked which may not have much directional bearing on bank nifty index as large private banks may consolidate their recent gains

* Going forward, we expect index to consolidate in the 52000 - 53500 band amid stock specific action ahead of earnings

* PSU banking stocks have witnessed extended profit taking/consolidation over few weeks and expected to form a higher bottom formation over next few sessions

* Meanwhile, we revise short term support to current week’s low of 52000 which also coincide with rising 10 -day ema that has been held since election outcome over past nineteen sessions

* Price structure : We observe that index is maintaining its higher high -low formation on multiple time frames and remain in steady uptrend and short term declines are attracting buying support . Hence consolidation in the short term will help index to undergo higher base formation and work out of overbought readings

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