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Nifty : 22336

Technical Outlook

Day that was… Equity benchmarks concluded volatile session on a flat note ahead of US inflation data. Nifty settled tad above Tuesday’s session at 22336. The market breadth remained in favour of declines with A/D ratio of 1:4.6 as Nifty midcap and small cap lost ~1.5%,each. Sectorally, barring IT and private banks all other indices ended in red weighed down by pharma, consumption, metal, PSU banks

Technical Outlook

• Nifty fizzled out initial up move and witnessed a range bound activity during the session wherein broader market continued to underperform. The daily price action resulted into doji like candle highlighting elevated volatility

• The Nifty has been consolidating in a 700 points range over past seven sessions. We believe, ongoing breather would make market healthy and pave the way to gradually head towards 22700 in coming week’s. In the process, on expected lines large caps would continue to outperform against the broader market as ratio of Nifty vs Nifty 500 has bottomed out. Hence, any decline from hereon tracking global development should be utilized as an incremental buying opportunity as immediate support is placed at 22200. Our positive bias is further validated by following observations:

• A) The Bank Nifty is undergoing higher base formation post faster pace of retracement while Nifty IT witnessed supportive efforts from 50 days EMA (cumulatively Banking and IT carries 50% weightage in Nifty) that bodes well for next leg of up move

• B) buoyancy in global equities with steady domestic and foreign flow would act as tailwind for domestic equities

• C) The cool off in oil prices and Dollar index are likely to act as tailwind

• The market breadth is declining which is a sign of mean reversion in mid/small cap stocks from over bought trajectory. Mid and small cap indices have rallied ~35% since October 2023. Intermediate corrections to the tune of average 12% in Mid and small caps have been a bull market norm. At present 8% correction is behind us

• Structurally, formation of higher high-low on the weekly chart signifies elevated buying demand that makes us to revise support base at 22200 as it is confluence of:

• Thursday’s panic low is placed at 22224

• 20 days EMA is placed at 22196

Nifty Bank: 47282

Technical Outlook

Day that was : The Nifty Bank declined for third session in a row ahead of inflation numbers . Nifty Bank index declined 45 points or 0 . 1 % for the session

Technical Outlook :

• The Index traded volatile on Tuesday and settled the session on a almost flattish note . Price action formed a high wave candle with shadows on either sides indicating volatility . Lower high -low formation indicate corrective phase amid profit taking from overbought readings . Index however held 20 -day average and short term support of 46900 amid volatility . Expect index to hold 46900 and stage a bounce back in coming sessions

• Going forward, we reiterate our positive stance on index and expect it to challenge life highs of 48600 levels in the coming weeks . However, some bouts of volatility near life highs due to overbought readings on daily time fram e would offer incremental buying opportunity with focus on large banks

• Meanwhile, we have upgraded short term support to 46900 levels which is confluence of 50 % retracement of past six session rally that coincides with rising 20 -day ema

• Structurally it is worth noting that each time Index has a tendency to challenge and surpass life highs after a base formation near rising 52 -week EMA . In current context index has already formed a strong base near 44600 levels . We expect index to maintain its rhythm and challenge life highs of 48636 in coming weeks

• Meanwhile, PSU bank index has hit fresh life high and expected to continue its relative outperformance on relative basis

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