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Nifty :23361

Technical Outlook

Day that was…

Indian equity benchmark concluded the Monday’s session on a negative note, and settled the day at 23361, down by 0.52% for the day. Sectorally, IT, Consumer durables outperformed while Oil & Gas, Metal and FMCG were laggard.

Technical Outlook:

* The Nifty witnessed a gap-down opening to initiate the week with a bearish bias. However, despite initial decline amid global volatility, Nifty staged a gradually recovery of >150 points from day’s low and managed to close above 23300 mark. The daily price action formed a hammer candle, signifying supportive efforts at lower levels. Additionally, the falling trendline breakout on RSI indicates revival in upward momentum.

* Going ahead, a follow through strength and sustainability above the budget session high of 23650 would be required to resume the uptrend and drive index towards 24000 mark, which is in the proximity of 38.2% retracement of the previous fall (26277-22786). Failure to do so, would lead to prolongation of consolidation amid stock specific action. In the process, elevated volatility to prevail as we sail through the Q3FY25 earnings season coupled with upcoming RBI Policy. 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 22800.

* Key point to highlight is that, within a structural bull market, secondary correction is a common phenomenon. With current 13% correction in place, we believe the index has absorbed the pessimism around the global as well as domestic uncertainties, leading to bearish extreme reading on the sentiment as well as momentum indicators, suggesting limited downside going ahead. The formation of higher high after six weeks corrective phase, indicating shift in momentum that makes us revise support base at 22800 as it is confluence of 123.6% external retracement of Nov-Dec up move (23263-24857) coincided with last week’s low of 22787

* 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. With 13% correction already in place we expect index to maintain the same rhythm and staged a strong rebound in coming weeks.

* On the market breadth front, the percentage of stocks above 50 days SMA (within Nifty 500 Universe) has bounced from bearish extreme level of 10 last week, meanwhile monthly stochastic oscillator is placed at lowest level since 2008 at 21, indicating impending pullback

Nifty Bank : 49210

Technical Outlook

Day that was :

The Bank Nifty witnessed a rangebound session and settled the day on a negative note at 49210 , down by 0 .60 % . The Nifty PSU Banking index underperformed the benchmark move and closed at 6117 , down by 1 .60 %

Technical Outlook :

* The Bank Nifty started the week with a gap -down opening post budget session . However, supportive efforts from the vicinity of budget day low of 48925 , staged an intraday recovery . The index traded within a range of 470 points throughout the day, while ending the session with a small bullish candle formation indication breather to the ongoing pullback .

* The past three weeks consolidation at lower band of two years rising channel makes us believe that the base has been set for next leg of up move . Going ahead, a follow through buying above the budget day high of 50000 will set a stage for the Bank Nifty to resolve higher and move towards the mark of 51600 being 61 . 8 % retracement of previous fall (53888 -47844), else stock specific action will continue ahead of upcoming key event of RBI’s Monitory Policy . Hence, traders are advised, any dip hereon should be capitalized as a buying opportunity in quality stock in a staggered manner as strong support is placed at 47800 mark .

* The key point to highlight is that, the bank Nifty created a higher high after six consecutive weeks of corrective phase . Additionally, the weekly Stochastic oscillator witnessed a bullish crossover, that augurs well for extended pullback .

* 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 47800 will now act a near - term support which is 80 % retracement mark of the Jun -24 to Sep - 24 rally (46078 -54467 ) .

* I n tandem with the benchmark index, the Nifty PSU Bank index opened gap down and closed below the previous day’s low to end the day with a bearish bias . However, the broader structure suggests that the last couple of days correction is mere pullback to the up -move witnessed from 5866 -6480 . Going ahead, the short - term resistance is placed at 6720 being 61 . 8 % retracement mark of the previous fall (7248 -5866 ) .

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