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Nifty : 20901

Technical Outlook

• The price action formed a small bear candle over second consecutive session, indicating breather after recent sharp up move amid overbought conditions. However, broader market outperformed as Nifty midcap and small cap indices clocked a fresh all time high

• The pause after past seven session’s elongated rally hauled daily and weekly stochastic oscillator in overbought territory signifies temporary breather that will make market healthy and pave the way for next leg of up move. We reiterate our positive stance and expect Nifty to head towards 21000 in coming sessions as it is price parity of Jun-Dec 2022 rally (15183-18887) projected from Mar-23 low of 16828. Thus, any breather should not be construed as negative instead dips should be utilized as incremental buying opportunity as immediate support is placed at 20300. Our positive bias is further validated by following observations:

• A) BFSI sector 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) The persistent FII’s inflow would help accelerate rally along with robust DII flows

• D) Brent prices remained subdues while decline in Dollar index is supportive of inflows

• 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 50% retracement of current leg of up move (19670-20962) coincided with Monday’s gap area (20268-20508)

Nifty Bank: 46841

Technical Outlook

• The price action formed a high wave candle with lower shadow indicating supportive efforts during intra day decline in the region of Monday’s bullish gap area (46431) as prices consolidated over past two sessions after almost achieving our targe of 46375 . Current breather is a result of overbought nature of daily stochastics (95 ) after 3500 points rally in just five sessions . A short term breather or consolidation would provide a buying opportunity, hence buy the dips towards 46200 -46400 region . WE expect PSU banks to relatively outperform in the process

• 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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