The price action formed a Doji with second bullish gap 46484 -46653 - ICICI Direct
Nifty : 20855
Technical Outlook
• The index witnessed a gap up opening over second consecutive session and continued to inch northward as the day progressed. As a result, index clocked a fresh All Time High of 20864. The daily price action formed a bull candle carrying higher high-low, indicating acceleration of upward momentum
• The shallow retracement post breakout from four months consolidation signifies inherent strength that in turn suggesting robust price structure that makes us believe Nifty to head towards 21000 in coming weeks as it is price parity of Jun-Dec 2022 rally (15183-18887) projected from Mar-23 low of 16828. In the process, bouts of volatility would offer incremental buying opportunity. Hence, any temporary breather should be utilized as incremental buying opportunity wherein immediate support is placed at 20300. Our positive bias is further validated by following observations:
• A) Bank Nifty which carries 35% weightage in the Nifty has witnessed faster pace of retracement as it retraced 14 weeks decline in just six weeks, indicating rejuvenation of upward momentum
• B) Percentage of stocks above 50day ema jumped from 25% at end of October to ~85% as on date indicating broad based participation in current breakout
• C) FII turned net buyers for November after two-month hiatus. This would help accelerate rally along with robust DII flows
• D) Brent prices remained subdues while decline in Dollar index to 103 is supportive of inflows to emerging markets and India
• The formation of higher peak and trough signifies elevated buying demand that makes us confident to revise support base at 20300 as its is confluence of 38.2% retracement of current leg of up move (19769-20702) coincided with Monday’s gap area (20268-20508)
Nifty Bank: 47012
• The price action formed a Doji with second bullish gap (46484 -46653 ) indicating continuation of upward momentum . Index gained 3500 points in just five sessions leading daily stochastics to 94 levels and could result into a pause in momentum or a breather . However trend remains firmly positive as index continues to form higher high -low formation . Use intraday dips as buying opportunity
• we expect positive momentum to continue and NiftyBank to head towards 47375 levels as it is 123 . 6 % retracement of July -October corrective phase (46369 - 42105 ) while immediate strong support is now being revised at 45900 being38 . 2 % retracement of past five session rally
• 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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