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Nifty : 19794

Technical Outlook

* The index witnessed a rangebound activity wherein it oscillated by 70 points range. The daily price formed a small bear candle carrying higher high low, indicating breather amid stock specific action

* Going ahead, sustainability above 19800 level for next couple of sessions would be required for extension of ongoing pullback. In the process, stock specific action likely to continue amid ongoing Q2 earning season. Thus, focus should be on accumulating quality stocks amid ongoing global volatility as strong support is placed at 19300. Our positive bias is based on following observations:

* a) The follow through strength above last week’s hammer like candle, signifies follow through strength after bouncing from 100 days EMA. Historically, during secular up move 100 days EMA acts as a strong support.

* b) Crude oil will be the key monitorable as pullback in crude is approaching the breakdown area of 3 months rising channel. Thus, decline in crude from higher level would provide impetus for equities

* The formation of higher peak and trough signifies inherent strength that makes us confident to revise support base upward at 19300 as it is confluence of 100 days EMA is placed at 19257 coincided with last week’s panic low of 19333

* Broader markets indices have been undergoing healthy consolidation wherein over past four weeks it retraced less than 50% of preceding 4 weeks’ rally. The slower pace of retracement signifies robust price structure. Thus, dips should be capitalized to accumulate quality stock

Nifty Bank: 44599

Technical Outlook

* The price action for the day formed a Doji candle that remained enclosed within Wednesday’s high -low range indicating pause near immediate hurdle of 44800 -45000 zone . This week, index managed to surpass prior week’s high after gap of three weeks

* Going forward, index holding 43300 -43500 despite geopolitical concerns would keep pull back options open towards 45000 levels . Only a decisive close above 45000 would indicate more meaningful reversal from 16 sessions of decline

* Structurally, Index has undergone a healthy retracement of entire April -July rally (19 % over 18weeks) in a shallow manner indicating inherent strength and continuation of medium term uptrend

* Our view is backed by following key observations

* Index has retraced 18week rally (38613 -46369 ) by just 38 . 2 % over 11 weeks indicating inherent strength

* PSU banks continue to relatively outperform and could lend some support at lower levels

* Heavy weight private banks including HDFC bank are now oversold and back to their key supports thereby projecting limited downsides

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