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Nifty : 19395

Technical Outlook

• The lack of follow through strength above previous session's high resulted into corrective activity. The daily price action formed a small bear candle, indicating consolidation amid stock specific action

• We expect index to gradually head towards 19600 in the coming weeks as it is placement of resistance trend line drawn adjoining Sep-Oct highs. However, the move towards 19600 would be in a non liner manner wherein stock specific action would prevail. Thus, bouts of volatility should be capitalized as incremental buying opportunity amid progression of earning season. Our positive bias is further validated by following observations:

• A) Bank Nifty (which carries 36% weightage in Nifty) has been sustaining above its 2 months falling trend line breakout, indicating pause in downward momentum. The Bank Nifty has been maintaining the rhythm of witnessing buying demand from 52 weeks EMA. In each of past three occasions post COVID lows, Bank Nifty rallied back to highs after testing 52-week EMA. Thus, we expect banking to lead recovery in coming weeks.

• B) The market breadth has seen decent improvement as currently >80% stocks of Nifty 500 are trading above its 200 days SMA compared to Oct reading of 75, indicating inherent strength

• C) The breach of October low in Brent crude oil would provide impetus to equity market

• D) Further cool off in global and domestic yields and reversal in dollar index would be key catalyst for acceleration of up move • The formation of higher low signifies supportive efforts at elevated support base that makes us revise the support base upward at 19000 as it is confluence of 200 days EMA coincided with last week’s low of 18940

Nifty Bank: 43683

Technical Outlook

• The price action formed high wave candle with higher shadow indicating profit taking at higher levels as index approached short term target and hurdle around 44000 levels . Index however maintained identical lows with previous session maintaining positive bias . Only a decisive close below previous session low would indicate pause in current upward momentum .

• In the upcoming truncated festive week we expect BankNifty to consolidate in the band of 42800 -44000 mark amid progression of earnings and lower participation in festive season . Only a sustained breach of 44000 mark would lead to further acceleration of upward momentum towards 44700 as it is 61 . 8 % retracement of entire down move (46310 -42105 ) .

• Key short term support is placed at 42800 which we expect to hold in case of volatility, as it is a confluence of :

• Rising gap of 2 nd November at 42700 • 61 . 8 % retracement of past eight sessions gains (42105 -43800 ) placed at 42750

• value of rising 52 -week ema which has been held on couple of occasions since CY2020 currently at 42800 (transitory breach usually is sign of capitulation)

• Structurally, Index is in the process of undergoing a retracement of March to July rally while pricing in various negatives in the process . So far index retraced 18 week rall y by 50 % over 15 week correction indicating shallow nature of retracement . Since covid lows index held 52 - week ema on three occasions, followed by new high in each case in subsequent quarters

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