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Nifty : 21457

Technical Outlook

• As envisaged in our CY23 yearly report, Nifty achieved our target of 21400 while discounting host of negative news during the year. The weekly price action formed a bull candle carrying higher highlow, indicating acceleration of upward momentum.

• The elongation of rallies followed by shallow retracement signifies robust price structure that makes us confident to revise target to the psychological mark of 22000 in coming weeks as it is upper band of upward sloping channel (drawn adjoining CY22-23 lows along with Dec-22 high of 18887.

• Key point to highlight is that past three weeks sharp up move of >1800 points have hauled weekly stochastic oscillator in overbought territory, indicating possibility of temporary breather cand; not be ruled out. However, such breather should not be construed as negative instead dips should be utilized as incremental buying opportunity as immediate support is placed at 20800 which we expect to hold. Our positive bias is further validated by following observations:

A) The follow through strength post faster retracement resulted into running breakout in Bank Nifty while Nifty IT index regained upward momentum after two months hiatus. Cumulatively both indices carries ~50% weightage in Nifty which would provide impetus for next leg of up move

B) Strong domestic macros, lower Brent crude prices, expectations of rate cuts globally would continue to act as tailwinds

• Sectorally, BFSI, IT, Pharma, Metal, PSU are our preferred sectors with largecaps to catch up midcaps from hereon

• On the stock front, in large cap we prefer Reliance, SBI, Axis Bank, Wipro, Auro Pharma, L&T, Tata Steel while in midcaps FSL, Hindustan copper, Birla Corp, Bank of India, Endurance, Century Ply are looking good

• The formation of higher peak and trough along with shallow retracement signifies elevated buying demand that makes us confident to revise support base at 20800 as its is confluence of 38.2% retracement of past three weeks rally (19768-21492) coincided with last week’s low of 20770

Nifty Bank: 48143

Technical Outlook

• The price action for the week formed a strong bull candle with higher high -low indicating continuation of strong rally post strong breakout above 46360 levels . Index achieved short term milestone of 48000 this week and continues to exhibit strength as dips are getting bought into . Although episodes of profit booking at higher levels after two week rally could not be ruled out, we maintain our stance on buying dips with a target of 49000 in coming weeks .

• Meanwhile we revise short term support to last week’s low of 46800 levels which also coincides with rising 10 day ema

• Structurally, index posted faster retracement of entire July -October decline in just four weeks highlighting robust price structure . Further participation of both private/public sector banks make the rally more dependable in terms of having further legs . We expect PSU banks to relatively outperform over medium term as the PSU bank index has given a multi year breakout

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