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Nifty : 21718

Technical Outlook

Day that was…

Equity benchmarks snapped two days up move as profit booking emerged after RBI’s monetary policy. The Nifty settled Thursday’s session at 21718, down 212 points or 1%. In the process, market breadth turned negative with A/D ratio of 1:1.4. Sectorally, Oil & Gas, IT, PSU Banks relatively outperformed while financials, FMCG underperformed

Technical Outlook

• The index accelerated downward momentum on the breach of Wednesday’s low of 21860 and formed a bear candle carrying lower high-low, indicating corrective bias

• Going ahead, we expect index to prolong the consolidation in the broader range of 22000-21400 that would help index to form a higher base and pave the way for next leg of up move. In the process, stock specific action would prevail as we approach the fag end of the earning season. Thus, accumulating quality stocks on dips would be prudent strategy as immediate support is placed at 21400. Our positive bias is further validated by following observations:

• A) The current up move is backed by improvement in market breadth as currently 70% stock are trading above their 50 days EMA compared to last week’s reading of 64%

• C) The cool off in Bond yield would provide impetus to global equities

• The index snapped two weeks breather and formed a higher high-low, indicating rejuvenation of upward momentum that makes us revise support base at 21400 as it is confluence of: A. 50% retracement of mid Dec-Jan rally (20508-22124) B. Last week’s low is placed at 21430

Nifty Bank: 45012

Technical Outlook

Day that was :

The Nifty Bank declined sharply on Thursday amid profit taking in private banks while PSU bank index gained 2 % . Nifty Bank index closed at 45012 , down 806 points or 1 .75 %

Technical Outlook :

• The index commenced the session on a positive note however failed to sustain at 50 -day average at 46200 once again and then declined for rest of the session led by private banks and also breached last week low in process . Index has failed to sustain above 50 -day average (46200 ) for fifteen trading sessions now and only a decisive breach above that level would pave way for acceleration of momentum

• Meanwhile holding immediate support of 44600 -44800 would keep pull back options open, else extended profit taking would prevail . On a relative basis, PSU banks and HFCs are expecte d to relatively outperform .

• Short term support to 44600 -44800 is confluence of : • 61 . 8 % retracement of October – December rally (42105 -48636 ) at 44600

• Last weeks low at 45071

• rising 200-week ema (44665 )

• 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 while PSU banks are exhibiting strength and likely to outperform

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