IGI Logo

Nifty : 22198

Technical Outlook

Day that was…

Equity benchmarks pared yesterday’s gains and settled Wednesday’s session at 21951, down 247 points or 1.1%. The market breadth remained in favour of declines with A/D ratio of 1:4.5 as Nifty midcap, smallcap plunged over 1.8%. Sectorally, all major indices ended in red weighed down by Auto, Oil & Gas, metal

Technical Outlook

• The index started the session on a soft note however, profit booking from higher levels dragged index lower. The selling pressure accelerate on the breach of Monday’s low of 22075. Consequently, daily price action resulted into sizable bear candle that engulfed Tuesday’s bull candle, indicating extended breather wherein midcaps relatively underperformed

• Going ahead, we maintain our positive stance and expect Nifty to gradually head towards 22700 in coming month. However, the move towards 22700 would be delayed due to ongoing consolidation near life highs. Key point to highlight is that, past six week’s price action has been captured in an upward sloping channel wherein intermediate corrections arrested within 600 points. In current scenario, as index has already corrected ~400 points from All Time High we believe, extended correction towards 21800-21700 zone would offer incremental buying opportunity. Therefore, buying dips would be the prudent strategy to adopt in quality stocks

• Midcaps and small caps have formed sizeable bear candles indicating continued profit taking as many constituents have approached overbought readings. We therefore expect these indices to undergo further retracements of past few month rally which will make a longer term up trend healthier. Stick to quality stocks with earnings visibility in this space

• Structurally, Nifty is approaching maturity of seasonal correction in election year (historically, in election year index tends to bottom out in Feb/March followed by pre-election rally). The strong rebound from key support highlights elevated buying demand that makes us retain support base at 21800 as it is confluence of:

A. 61.8% retracement of current up move off mid Feb low of 21530 is placed at 21823

B. Last week’s low is placed at 21875

C. Lower band of rising channe

Nifty Bank: 46588

Technical Outlook

Day that was :

The Nifty Bank witnessed decline ahead of Monthly expiry session on Wednesday led by profit booking in recently run up PSU and private banks . Index closed at Nifty Bank index closed at 45963 , down 625 or 1 .34 % for the day

Technical Outlook :

• The index commenced session on a muted note while witnessed sudden selling after first couple of hours trading indicating some profit taking in large banks . As a result index closed near day low and breached past eight session lows, resulting in sizeable bear candle that closed below 50 -day ema and indicating extended retracement of preceding two week gains (46633 - 47363 )

• In the coming sessions, we expect index to undergo higher lows as compared to identical bottoms formed in Jan and early Feb at rising 52 -week ema (44432 ) . Key point to highlight is index is undergoing retracement in slower pace as it has retraced 6session rally (46633 - 47363 ) by 50 % over past six sessions . We therefore recommend to adopt buy the dips strategy as we expect index to eventually hea d for target of 47500 which is a value of 80 % retracement of 16 -25th jan decline and bearish gap area

• Meanwhile, a decisive breach below immediate support of 45800 may lead to extended decline towards key support of 45100 which is

• A) 80% retracement of rally (44633 -47136 ) at 45174

• B) Equality with early February decline

Please refer disclaimer at https://secure.icicidirect.com/Content/StaticData/Disclaimer.html

SEBI Registration number INZ000183631