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Nifty : 25377

Technical Outlook

Day that was..

The Nifty concluded volatile session on a flat note ahead of Fed meet outcome. Nifty settled the session at 25377, down 41 points. The market breadth remained in favour of declines as broader market relatively underperformed. Sectorally, financials regained upward momentum while IT, Pharma underwent profit booking ahead of Fed meet outcome

Technical Outlook:

* The index underwent profit booking after recording fresh All Time High of 25482, resulting into a high wave candle, indicating elevated volatility ahead of key event. With overnight Fed rate cut and positive US futures we are headed to open positive. Focus would be on beneficiaries of rate cut cycle like NBFCs, Infra, IT sectors as markets would try to assess the beneficiaries of rate cut cycle

* Broadly, price action suggest that part of the rate cut was already discounted and indices after a brief consolidation would continue their upward trajectory gradually towards 25800 in coming weeks. Hence, buying dips would be the prudent strategy to adopt as strong support is placed at last week lows of 24750 levels.

* Our view is anchored upon following key observations:

* Private banks showing signs of strength follow through strength post inverted Head & Shoulder breakout

* Liquidity: FIIs have been net buyers in last week. With prospects of rate cuts in US, we expect FII money returning to EM and India stands to benefit significantly. This is incrementally positive with already robust domestic liquidity

* September seasonality favours buying dips: historically, September volatility with average of 3% decline has provided buying opportunity as 3M forward returns have been around 7% with 78% probability

* Brent: Prices continue their down trend after breakdown from one year consolidation. Expect prices to head towards $67 over coming months while upsides capped at $80

Nifty Bank : 52750

Technical Outlook

Day that was:

Nifty Bank extended winning streak for sixth session in a row led by private banks to settle at 52750 , up 562 points or 1 % on Wednesday amid weekly expiry

Technical Outlook:

* The Index opened flattish and then extended gains amid buying in large private and in the process surpassed short term milestone of 52600 before profit taking took place near psychological mark of 53000 levels . Price action formed a higher high -low for sixth session in a row, maintaining positive bias . Over past eight sessions, index gained 5 % thereby making current leg of rally (50369 -52954 ) bigger than previous leg (49654 -51750 ) indicating structural improvement

* In coming sessions, focus would also be on NBFC and PSU Banks which could benefit from rate cut cycle in medium term

* Going forward, we maintain positive bias and expected index to gradually challenge life highs of 53357 in coming weeks in non linear fashion and therefore recommend buy on dips approach . Meanwhile, we have revised short term support levels to current week lows of 51500 that coincide with rising 20 -day ema

* Private Banks leading PSU peers : Most private banks have undergone base formation over past few weeks and have outperformed PSU peers in current week

* Price structure : A) With Thursdays up move index is forming a higher bottom as compared to August lows and poised for a breakout from bullish reversal pattern indicating further upsides B) Since beginning of 2024 , after each 15 % rally index has a tendency to correct around 8 - 9 % from highs resulting in higher bottom . In current context, index corrected 7 % from highs and retraced post election five week rally by 50 % over 10 weeks indicating slow retracement and robust price structure

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