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Nifty : 22122

Day that was…

Equity benchmarks started the week on a buoyant note and clocked a fresh All Time high of 22186. The Nifty gained 82 points to settle the session at 22122, up 0.4%. Market breadth remained positive with A/D ratio of 1.6:1. Sectorally, consumption, pharma outshone while IT, realty underperformed

Technical Outlook

• The index started the week on a positive note and recorded fresh All Time high. However, minor profit booking at higher levels pared some of intraday gains. As a result, daily price action formed a doji candle carrying higher high-low, indicating positive bias amid elevated volatility.

• The index logged a resolute breakout from past five weeks consolidation and clocked a fresh All time High of 22186. Key point to highlight is that, past seven sessions decline got retraced in just four sessions, indicating faster retracement along with multi sector participation makes us confident to revise target to 22700 for coming weeks as seasonal correction in election year approaches maturity (historically, in election year index tends to bottom out in Feb/March followed by pre-election rally). Thereby, bouts of volatility should not be construed as negative instead adopt buy on dips strategy which has been faring well as currently strong support is placed at 21400.

Our positive bias is further validated by following observations:

• A) Heavyweight Banking index (commanding >33% weight) has formed a strong base at 200-day ema

• B) The most of global equity markets are hovering around their 52-week highs, indicating buoyant global cues

• C) steady oil prices and bond yields are likely to act as tailwind

• The strong rebound from key support highlights elevated buying demand that makes us revise support base at 21400 as it is confluence of: A. 50% retracement of mid Dec-Jan rally (20508-22124) B. Past three week’s low is placed at 21430 C. 50 days EMA is placed at 21385

Nifty Bank: 46535

Day that was :

The Nifty Bank maintained its winning streak and closed higher led by large private bank . Index settled the session at 46535 , up 150 points or 0 .32 % .

Technical Outlook :

• The index started the week on positive note and surpassed prior week high before marginal profit booking towards end as five consecutive days gains led daily stochastics into overbought territory (93 ) .

• Key takeaway is that index sustained above its 50 -day ema (46060 ) for third session after one month and posted five consecutive positive close for first time in six months indicating strength and positive momentum . While PSU banks continue outperformance, buying in private banks is a sign of relief . We expect index to gradually head towards 47500 in coming weeks which is a value of 80 % retracement of 16 -25th jan decline and bearish gap area

• Index has undergone a strong base formation over past month in the vicinity of 52 -week ema Thereby, we retains short term support to 44600 -44800 zone is confluence of :

• A) 61 . 8 % retracement of October – December rally (42105 -48636 ) at 44600

• B) Last weeks low at 44633

• C) rising 52-week ema (44280 )

• Structurally, index is undergoing a retracement of November – December rally wherein it gained around 15 % over 9 week period . Index has so far retraced 50 % of the rally over past three weeks and expected to further undergo consolidation .

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