IGI Logo

Nifty :23482

Technical Outlook

Day that was…

Equity benchmarks snapped three week’s losing streak while overcoming volatility amidst Budget, FII’s sell-off. The Nifty settled the eventful week at 23482, up 1.7% for the week. Sectorally, consumption, auto, realty outshone while IT, pharma took a breather

Technical Outlook:

* The Nifty opened the week on weak note but staged a strong recovery closing above the previous two week’s high. The weekly price action formed a bullish engulfing candle that engulfed past two week’s trading activity, indicating pause in downward momentum. Additionally, the weekly stochastic oscillator has registered a bullish crossover from oversold zone, reinforcing momentum in ongoing pullback. In the process, India VIX has cooled off to settle the week at 14.

* The index has undergone strong base formation (23400-22800) in the vicinity of 52 weeks EMA, over past three weeks. The breakout from this base formation coupled with falling trend line breakout clearly indicates conclusion of corrective phase in turn suggesting resumption of uptrend towards implicated target of 24000 for the coming month. In the process, volatility would remain elevated tracking clarity on Trump Government’s new policies and RBI’s monitory policy. Hence, any dip from hereon should be used as buying opportunity in quality stock backed by strong earnings

* Key point to highlight is that, within a structural bull market, secondary correction is a common phenomenon. With current 13% correction in place, we believe the index has absorbed the pessimism around the global as well as domestic uncertainties, leading to bearish extreme reading on the sentiment as well as momentum indicators, suggesting limited downside going ahead. The formation of higher high after six weeks corrective phase, indicating shift in momentum that makes us revise support base at 22800 as it is confluence of 123.6% external retracement of Nov-Dec up move (23263-24857) coincided with last week’s low of 22787

* Structurally, since 2002, bull market average corrections have been to the tune of 14% while time wise index has not recorded negative monthly close for more than 3-4 months. With 13% correction already in place we expect index to maintain the same rhythm and staged a strong rebound in coming weeks.

* On the market breadth front, the percentage of stocks above 50 days SMA (within Nifty 500 Universe) has bounced from bearish extreme level of 10 last week, meanwhile monthly stochastic oscillator is placed at lowest level since 2008 at 21, indicating impending pullback

* On the sectoral front, BFSI, Auto, Consumption, Hospitality would be in focus

Nifty Bank : 49507

Technical Outlook

Day that was :The Bank Nifty witnessed bullish momentum throughout the week and settled the eventful week with a bullish bias at 49507 , up by 2 .36 % . The Nifty PVT Banking index outperformed the benchmark move and closed at 24425 , up by 2 .84 %

Technical Outlook :

* The Bank Nifty started the week with a gap -down opening, however it witnessed buying demand from the vicinity of previous low of 47900 and gradually moved north throughout the week . In the process, the index created a bullish engulfing candle, indicating bullish bias .

* The past three weeks consolidation at lower band of two years rising channel makes us believe that the base has been set for next leg of up move . Going ahead, we expect the Bank Nifty resolve higher and move towards the mark of 51600 being 61 . 8 % retracement of previous fall (53888 -47844 ) . In the process, RBI’s Monitory Policy will be the key monitorable . Hence, traders are advised, any dip hereon should be capitalized as a buying opportunity in quality stock in a staggered manner as strong support is placed at 47800 mark .

* The key point to highlight is that, the bank Nifty created a higher high after six consecutive weeks of corrective phase . Additionally, the weekly Stochastic oscillator witnessed a bullish crossover, indicating acceleration in ongoing pullback .

* Structurally, after 12 % correction the Bank Nifty bounced from the lower end of the long -term rising trendline amid oversold condition, indicating a pause in the downward momentum . The change in market breadth observed in the current week suggests that a short -term bottom is in place and the mark of 47800 will now act a near -term support which is 80 % retracement mark of the Jun -24 to Sep -24 rally (46078 -54467 ) .

* In tandem with the benchmark index, the Nifty PSU Bank made a lower low after bouncing from the 61.8% retracement of the previous up -move (5866 -6480), indicating a pause in downward momentum . Moreover, the daily price action created an inverted hammer pattern, indicating a short -term trend reversal . Going the next level of support is placed at 6720 being 61 . 8 % retracement mark of the previous fall (7248 -5866 ) .

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

SEBI Registration number INZ000183631