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Nifty :23603

Technical Outlook

Day that was…

Indian equity benchmark concluded the weekly expiry session on a negative note, and settled the day at 23603, down by 0.39% for the day. The market breadth remained flat with A/D ratio of 1:1.10 as broader market relatively underperformed, especially midcap index which was down by ~1.26%. Sectorally, Pharma, IT, and private Bank outperformed. Whereas, Realty, Consumer Durables and FMCG were the laggards.

Technical Outlook:

* The Nifty started the session on a positive note however, failed to capitalized initial up move and gradually inched downward as the day progressed. As a result, index retested 200-Day EMA. However, BankNifty relatively outperformed the benchmark ahead of the RBI monetary policy indicates positive strength of the trend. As a result, Nifty formed a small bear candle, indicating breather.

* Going ahead, we expect index to trade volatile ahead of the RBI monetary policy which will dictate the further course of action. Sustaining above the past three weeks breakout area of 23300 will be the key monitorable that would pave the way towards 24000 in coming weeks as it is in the proximity of 38.2% retracement of the previous fall (26277-22786). Key point to highlight is that, the Bank Nifty has logged a resolute breakout from three weeks base formation, indicating resumption of uptrend. We believe, the extended pullback in Bank Nifty would drive Nifty higher (as it carries ~32% weightage in Nifty). In the process, elevated volatility to prevail as we sail through the Q3FY25 earnings season. Hence, buying on dips in quality stocks which are backed by strong earnings would be the prudent strategy to adopt as key support is placed at 23200.

* Historically we have observed that, within a structural bull market, secondary correction is a common phenomenon. With current 13% correction in place, the index has approached price and time wise correction. 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. Over past four months index has corrected 13% while absorbing the pessimism around the global as well as domestic uncertainties, leading to bearish extreme reading on the sentiment as well as momentum indicators, suggesting impending pullback.

* Meanwhile, the formation of higher high after six weeks corrective phase and close above budget sessions high, indicating shift in momentum that makes us revise support base at 23200 as it is confluence of 61.80% retracement of recent up move (22786-23762) coincided with current week’s low of 23222.

* On the global macro front, the US dollar index has cooled off after making a shooting star candlestick pattern on 3rd Feb 25 and seen follow through selling, signifies corrective bias wherein upside is capped at 110 levels. Meanwhile, Crude prices have declined below 75 that bodes well for domestic equities

Nifty Bank : 50382

Technical Outlook

Day that was :

The Bank Nifty witnessed a rangebound action for the second consecutive day where it closed the session on a flat note at 50382 , up by 0 .08 % . The Nifty PVT Banking index outperformed the benchmark move and closed at 24907 , up by 0 .31 % .

Technical Outlook :

The Bank Nifty witnessed gap -up opening, but lacked follow through buying resulted index to trade within a range of 400 points . In the process, it created long legged doji candle, indicating a breather to the ongoing rally above 200 days EMA, which is a healthy sign for further up -move .

* Going ahead, volatility will be observed ahead of RBI’s monitory policy which will dictate the further trend, where the key support is placed at 49500 being 50 % retracement of recent up -move (47844 -50553), while the mark of 50900 which is 50 % retracement of the previous fall (53888 -47844 ) will be the immediate resistance on the upside , sustaining above which will open the door for 51600 in coming weeks

* 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 48700 shall provide immediate support and any dip witnessed hereon should be capitalized as a buying opportunity in quality stock in a staggered manner .

* 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 48700 will act as an immediate support, being 61 . 8 % retracement mark of the recent up -move (47844 -50009 ) .

* In tandem with the benchmark move, the PVT Bank index witnessed breather in last two trading sessions, post breakout to the 21 -days consolidation range, indicating a healthy sign of continuation to the ongoing bullish momentum . Moving ahead, the next level of resistance is placed at 25250 which is the upper end of the falling channel formed adjoining the moves of Sep -24 & Dec -24 .

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