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Nifty : 19993

Technical Outlook 

* The index witnessed a gap up opening tracking positive global cues and clocked a fresh all time high of 20110. However, profit booking from higher levels dragged index below morning gap area. As a result, daily price action formed a bear candle carrying higher highlow, indicating breather after recent sharp up move.

* Going ahead, we expect Nifty to trade with a positive bias and gradually head towards revised target upward at 20400 in coming weeks. Key point to highlight is that, the index has retraced past 29 sessions decline (19991-19223) in just seven sessions. The temporary breather after faster pace of retracement would make market healthy and pave the way for next leg of up move. Thus, buying on dips would remain the prudent strategy to adopt as immediate support is placed at 19600. Our positive bias is based on following observations:

* A) Faster retracement indicates structural improvement

* B) Sectors like Bank Nifty and IT which carries 50% weightage in Nifty have regained upward momentum which would provide impetus for next leg of rally in Nifty

* The broader market indices underwent profit booking amid overbought condition owing to 42% rally seen over past five months. However, it is important to note that on multiple occasions Nifty midcap and small cap indices have managed to hold the 20 days EMA since April 2023. Therefore, 20 day EMA (placed at 39500) would be the key monitorable going forward as holding above the same would keep pullback option open else extended correction.

* Structurally, we are in a secular bull market depicted by the acceleration of upward momentum in broader market space post breakout from 5 years consolidation of Nifty Midcap vs Nifty ratio line. In a secular bull market secondary correction is a common phenomenon wherein historically midcap index corrected to the tune of 8-10%. Therefore, ongoing correction 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 19554 

Nifty Bank: 45511

Technical Outlook

* The price action for the day formed a small bear candle, although it maintained higher high -low formation indicating pause in upward momentum near short term hurdle of 45800 , after three day rally

* Going forward, we expect index to challenge immediate hurdle of 45800 in coming few sessions and eventually head towards life highs of 46369 in September, therefore buying dips template is recommended with elevated support at 44500 levels

* Our view is backed by following key observations

* Index has formed strong support at 43500 over past few weeks and sustained above 20 -day ema (44550 ) for entire last week

* Past six weeks corrective phase has been shallow and led prices to oversold conditions . Shallow retracement indicate continuation of structural uptrend

* PSU bank index has already hit new life highs after six week consolidation indicating outperformance

* Private banks with significant weightage are oversold and at key supports . Expect them to bounce back and lend support

* PSU Banking index has maintained its relative outperformance on expected lines . Index has given a fresh breakout and expected to extend its outperformance in coming months

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