The Nifty PSU Banking index underperformed the benchmark, closing the day at 6133 , down by 1 .02 % - ICICI Direct
Nifty :23381
Technical Outlook
Day that was…
Equity benchmarks extended losses for the fourth consecutive day, tracking subdued global cues amid new tariffs announced by the Trump government. Nifty was down 0.76% to settle at 23,381. The market breadth remained negative, with an A/D ratio of 1:3.60, as the broader market relatively underperformed—both Smallcap100 and Midcap100 indices were down by ~2%. Sectorally, all sectors ended in red, with Realty, Metal, and Consumer Durables being the laggards.
Technical Outlook:
* The Nifty started the week with a gap-down opening and gradually drifted downward as the day progressed. Eventually, it found support near 23316 which is in the vicinity of 50% retracement level of the previous upmove (22,786-23,807). As a result, the daily price action formed a bear candle, indicating a continuation of the corrective phase.
* The index is taking a breather after witnessing a breakout from a three-week base formation. The formation of higher high-low on the weekly chart makes us believe, the ongoing breather would make the market healthy. In the process, immediate hurdle is placed at 23800. A decisive close and sustenance above 23800 would pave the way for further up move, till then consolidation will likely to pan out in the broader range of 23800-22800. Meanwhile, bouts of volatility cannot be ruled out amid anxiety around US Tariff related developments, inflation prints on both the domestic and US fronts. Meanwhile, Prime Minister Modi’s visit to the US would also be a key monitorable. Hence, focus should be on accumulating quality stocks on dips backed by strong earnings, as immediate support is placed at 22,800.
* A key point to highlight is that, mirroring the benchmark move, supportive efforts emerged in Bank Nifty from the lower band of a two-year rising channel, while the Bank Nifty/Nifty ratio chart is bouncing from long-term cycle lows, indicating relative outperformance going ahead.
* Historically, within a structural bull market, secondary corrections are common. With the current 13% correction in place, the index has approached both price-wise and time-wise correction levels. Structurally, since 2002, bull market corrections have averaged 14%, while time-wise, the index has not recorded a negative monthly close for more than 3-4 months. Over the past four months, the index has corrected 13%, absorbing pessimism around both global and domestic uncertainties, leading to bearish extreme readings on sentiment and momentum indicators, suggesting an impending pullback.
* Meanwhile, the formation of a higher high after a six-week corrective phase and a close above the Budget session’s high, indicate a shift in momentum. The support base is at 22,800, as it aligns with the 38.2% retracement of the up move from (16828-26277) and coincides with the January’s low of 22,786.
* On the global macro front, amidst tariff-related anxiety, the US Dollar Index made a failed attempt to surpass the 110 mark and is currently trading around 108 levels. Meanwhile, Brent crude extended losses for the third consecutive week and is hovering around $75. A falling US Dollar Index and Brent crude prices augur well for risk-on sentiment in emerging markets.
* On the broader market front, Nifty Midcap and Small Cap both underperformed the benchmark, losing approximately 2% each and closed below previous week’s low indicating prolongation of consolidation. However, both indices are near a long-term four-year rising trendline. Sustaining above the Budget week’s hammer-like candle would lead to a revival in upward momentum in the broader market and hammer low will act as crucial support going ahead. Additionally, the monthly stochastic oscillator is at its lowest level since 2008, at 17, indicating an impending pullback.
Nifty Bank : 49981
Technical Outlook
Day that was :
The Bank Nifty continued the bearish bias from the Friday’s session amid global volatility and closed the day on a negative note at 49981 , down by 0 .35 % . The Nifty PSU Banking index underperformed the benchmark, closing the day at 6133 , down by 1 .02 % .
Technical Outlook :
* The Bank Nifty started the week on a muted note and gradually declined in the first half of the trading session . However, supportive efforts emerged from the lower band of rising trendline (drawn adjoining the lows of 27th Jan & 3rd Feb) and the index recovered more than half of its intraday losses . In the process, the price action created a hammer like candle, indicating supportive efforts from 50 % retracement of last leg of up move (48906 -50642 ) .
* Going ahead, the index needs to sustain above the recent swing high of 50640 which acted as a resistance in last couple of trading session and resume its higher high low formation for further up - move towards the mark of 51600 which is 61 . 8 % retracement of the previous fall (53888 -47844 ) . On the other hand, the key support is placed at 48900 being 61 . 8 % retracement of recent up -move (47844 -50641 ) . The Inflation on domestic and US front will be the key data points to monitor .
* The Bank Nifty has witnessed a breakout from the three -week base formation around the lower band of 2 years rising channel and closed above the budget day high, indicating revival in the upward momentum . Thus, making us believe, that the index will continue to resolve higher and move towards the mark of 51600 being 61 . 8 % retracement of previous fall (53888 -47844 ) . In the process, the mark of 48900 shall provide immediate support and any dip witnessed hereon should be capitalized as a buying opportunity in quality stock in a staggered manner .
* The Nifty PVT Bank index is consolidating in a narrow range of 300 points since past four sessions post breakout of the 21 days consolidation on the upside, indicating breather to the ongoing uptrend . The daily RSI indicator witnessed a falling trendline breakout, indicating acceleration of up -move . Moving ahead, once the consolidation range is breached on the upside, we expect the index to move towards the mark of 25250 which is the upper end of the falling channel formed adjoining the moves of Sep -24 & Dec -24
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