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Nifty :23332

Technical Outlook

Day that was…

Indian equity benchmarks closed the session on a positive note ahead of key event and settled at 23332, up 0.72%. Market breadth favored the advances, with an A/D ratio of 3:1, where broader market relatively outperformed. Sectorally, all sectors closed in green, where Realty, Consumer Durable and FMCG were outshone.

Technical Outlook

• The Nifty opened with a gap-up (23165-23192) making higher-high-low throughout the day, where intraday declines were bought into. As a result, the daily price action formed an inside bar, indicating breather after Tuesday’s profit booking.

• The benchmark index is opening gap-down tracking reciprocal tariff announcement by U.S. Key point to highlight is that, the index is witnessing a slower pace of retracement as over past six days it has merely retraced 50% of preceding six days of up-move (22353-23869), despite volatility amidst anxiety around tariff announcement. Going ahead, holding 22300 (on a closing basis) which is confluence of 80% retracement of the move from election day low and all time high (21281-26277) and 100-week EMA which will act as cushion and due to the tariff, chances of profit booking for couple of sessions cannot be ruled out but should be considered as healthy retracement making a higher base, for further upside index need to close and sustain above previous day’s high, which will eventually pave way for upside towards 23800. In the process, bouts of volatility will prevail while settling down the anxiety around US tariff announcement coupled with the upcoming earnings season. Hence stock specific action is likely to continue.

• Structurally, after a steep 16% correction over the last five months, market sentiment and momentum indicators have rebounded from bearish extremes. The percentage of stocks trading above their 50-day SMA surged from 7% to 55% in Wednesday’s session, highlighting a strong improvement in breadth. The index also retraced its previous 19-session decline in just 14 sessions, confirming a faster pace of retracement. After a ~1,900-point rally, the Nifty faced resistance at 23800, coinciding with 61.8% retracement of previous fall (24858-21964). Any pullback from here on should be considered as healthy retracement, which will allow the index to form a higher base around 22300 mark. Hence, the focus should be on accumulating quality stocks with a medium-term perspective

• On the broader market front, Nifty Midcap and Small cap indices have seen a rebound after approaching maturity of price and time wise correction. Historically, maximum average correction in Midcap and small cap indices have been to the tune of 27% and 29% while time wise such correction lasted for five months. Subsequently, both indices have seen 28% returns in next six months.

• Formation of higher peak and trough indicates buying demand at elevated support base, which makes us revise the support levels at 22300, which represents a 80% retracement of the upmove from election day’s low and all time high (21,281–26,277) and 100-week EMA. This level is expected to act as a strong cushion, ensuring that dips remain buying opportunities rather than trend reversals.

Nifty Bank : 50827

Technical Outlook

Day that was :

The Bank Nifty witnessed bullish action ahead of US tariff announcement where it settled the Wednesday’s session on a positive note at 51348 , up by 1 .02 % . Meanwhile, both the Nifty PVT Bank as well as the Nifty PSU Bank index contributed to the benchmarks move where both the indices were up by 0 .74 % .

Technical Outlook :

* The Bank Nifty witnessed a gap -up opening and witnessed gradual up -move throughout the day where the intraday dips were bought into . The price action resulted in a inside bar candle, indicating prolonged consolidation .

* The Bank Nifty is opening gap -down tracking reciprocal tariff announcement by U . S . Key point to highlight is that, the Bank Nifty is trading in a range of ~1300 points since last seven sessions following the sharp up -move of ~ 9 % from the multi support zone of 47800 , indicating breather in upward momentum . The index has not even retraced 38 . 2 % of the recent up -move (47702 -52064 ) and has respected the previous gap area (50672 -50796), thus pricing in the anxiety ahead of the key event . Going ahead, holding 50200 -50000 on a closing basis post event would keep the pullback options open, where bouts of volatility will prevail amid, US tariff announcement coupled with the upcoming earnings season . Hence, buying on dips would be the prudent strategy to adopt with the strong support placed around 50000 mark, with stock specific action likely to continue .

* Structurally, the Bank Nifty bounced from the vicinity of 100 -week EMA after forming a double bottom pattern . Additionally, the swift up move in banking space helped Bank Nifty to surpass past two months high, suggesting inherent strength . The current up move of 9 % is strongest since September that confirms resumption of uptrend . As a result, previous five -month “sell -on -rally” approach has now shifted to a “buy -on -dips” strategy, amid structural improvement .

* Mirroring the benchmark index, the Nifty PSU Bank index is witnessing rangebound action where it is trading in a narrow range of ~25 0 points since past seven sessions . Key point to highlight is that, the index is witnessing a slower pace of retracement as over past six days it has merely retraced 38 . 2 % of preceding seven days of up -move (5740 -6366), indicating relative outperformance . Structurally, the PSU Bank recovered more than 90 % of its previous month losses with a higher high -low formation after nine months of corrective bias, indicating structural turn around . Going ahead, we expect the index to continue its outperformance and head towards the mark of 6600 being 61 . 8 % retracement of the previous fall (7248 - 5530 ) . On the other hand, the mark of 6000 will provide immediate support being 50 % retracement of recent up -move(5530 -6366 ) .

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