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Nifty :23025

Technical Outlook

Day that was…

Equity benchmarks faced heightened volatility after Trump’s inauguration event, and ended on a negative note. The Nifty shredded 320 points to settle at 23,025. The broader market underperformed the benchmark, with an A/D ratio of 1:3. Sectorally, all the sectors closed in red, where Realty, Consumer Durable, and PSU Bank were the most laggards.

Technical Outlook:

* The Index witnessed a gap-up opening (23,344–23,421) and witnessed roller coaster movement where index oscillated by 1400 points. In the process, it formed a sizable red candle which engulfed last 6 trading sessions price action signaling bear in action. Key point to highlight is that Nifty faced a stiff resistance near last week’s high of 23390 levels and witnessed a selling pressure resulting in a close at the lowest levels since June 7, 2024 for the first time with INDIA VIX close above 17 levels for the first time since 6th August 2024 signaling more volatile sessions ahead .

* The lack of follow through strength above 23300 would indicate prolonged corrective bias, contrary to our expectation. Therefore, only a decisive close along with sustainability for couple of sessions would result into extended pull back above 24200 levels. Failure to do so would lead to extended correction wherein strong support is placed at 22500. Going head, we believe anxiety around Trump policies would settle down in next couple of sessions which would fuel momentum in equities.

* On the structural front past four months 12% decline hauled weekly/monthly stochastic oscillator in oversold territory (placed at 7/14 respectively), and we witnessed positive divergence in RSI on daily time frame, indicating impending pullback and this to materialize index need to close above 23300 decisively with sustainability for couple of days.

* The Index witnessed a gap-up opening (23,344–23,421) and witnessed roller coaster movement where index oscillated by 1400 points. In the process, it formed a sizable red candle which engulfed last 6 trading sessions price action signaling bear in action. Key point to highlight is that Nifty faced a stiff resistance near last week’s high of 23390 levels and witnessed a selling pressure resulting in a close at the lowest levels since June 7, 2024 for the first time with INDIA VIX close above 17 levels for the first time since 6th August 2024 signaling more volatile sessions ahead .

* The lack of follow through strength above 23300 would indicate prolonged corrective bias, contrary to our expectation. Therefore, only a decisive close along with sustainability for couple of sessions would result into extended pull back above 24200 levels. Failure to do so would lead to extended correction wherein strong support is placed at 22500. Going head, we believe anxiety around Trump policies would settle down in next couple of sessions which would fuel momentum in equities.

* On the structural front past four months 12% decline hauled weekly/monthly stochastic oscillator in oversold territory (placed at 7/14 respectively), and we witnessed positive divergence in RSI on daily time frame, indicating impending pullback and this to materialize index need to close above 23300 decisively with sustainability for couple of days.

Nifty Bank : 48570

Technical Outlook

Day that was :

The Bank Nifty pared Monday’s gains and settled the session on a negative note tracking selloff in index heavy weights . The index settled Tuesday’s session at 48570 , down 1 .58 % . The PSU Bank index correspondingly faced pressure amid selloff in benchmark and tumbled 1 .73 % for the day

Technical Outlook :

* The index trimmed initial gains and gradually inched southward as intraday pullbacks were short lived . As a result, daily price action formed a bear candle that engulfed Monday’s bull candle, indicating lack of follow through strength . In the process, the index witnessed roller coaster ride where it oscillated by 2955 points indicating elevated volatility .

* Going ahead, the index needs to sustain above the mark of 49800 (on a closing basis for next couple of sessions) which is the previous breakdown area, coinciding with 52 -week EMA which will open the gates for extended pullback . On the other hand, failure to do so will result into prolongation of ongoing corrective bias where the next support is placed at 46800 being 80 % retracement of previous up -move(46077 - 54467 ) .

* The key point to highlight is that, the Bank Nifty is trading at lower band of multi year rising channel amid oversold conditions as the weekly stochastic oscillator is placed at 10 , indicating impending pullback . In the process, volatility is likely to continue amid ongoing result season where several Banking heavyweights are coming out with their Q 3FY25 earnings in the coming trading sessions .

* In tandem with the benchmark index, PSU bank index faced rejection of the falling trendline and engulfed the previous day candle . This formation indicates a pause to the ongoing pullback where couple of days breather cannot be ruled out . Going ahead, a decisive close above the falling trendline placed around 6500 will fuel the next leg of up move, while on the downside the 6000 mark, which is 80 % retracement of the recent up -move (5866 -6480 ) will provide immediate support

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