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Nifty : 19524

Technical Outlook

* The index failed to sustain above previous session’s high as Nifty dipped 175 points from day’s high. As a result, daily price action formed a bear candle that engulfed Wednesday’s bull candle, indicating lack of follow through strength

* Going forward, we expect Nifty to hold strong support around 19500 amid ongoing volatility followed by healthy consolidation in the broad range of 19500-20000. Thus, capitalize dips as buying opportunity

* Structurally, ongoing decline/volatility is transitory in nature and part of the healthy retracement of three week rally (19223-20222) and should not be construed as negative rather an incremental opportunity to ride the uptrend

* Broader markets represented by Midcap and Small cap indices are currently undergoing healthy consolidation post >40% rally in past six months. In a secular bull market secondary correction is a common phenomenon wherein historically 8-10% corrections provided incremental buying opportunity.

* Key support base at 19500 is a confluence of:

* a) 61.8% retracement of current up move (19223- 20222), at 19605

* b) Presence of rising 50-day ema at 19550 and

* C) value of rising trendline connecting key swing lows of June and August 2023

* Breadth: Percentage of stocks above 50-dma sustained ~70% despite consolidation over past two weeks indicating shallow nature of correction and sign of overall strength

Nifty Bank: 44300

Technical Outlook

* The price action formed bear candle that engulfed Wednesday’s hammer like bull candle However index held Wednesdays low indicating slo w down in downward momentum as prices approached near key support of 44200 -44000 zone amid oversold readings . In coming sessions follow through strength above Wednesdays high (44800 ) that coincide with 50 -day ema would be ikey for any meaningful reversal

* We expect index to hold key support zone s to emerge in 44000 -44200 zone followed by consolidation in the range of 44000 -45200

* Structurally , Index has retraced past four week rally by 61 . 8 % over seven sessions leading daily stochastic close to oversold readings (reading of 14 )

* Our view is backed by following key observations

* On higher degree, index is consolidating in a broad range of 43600 -46300 since early August as it is digesting strong rally from March lows of 38613

* PSU banks continue to relatively outperform and could lend some support at lower levels

* Heavy weight private banks including HDFC bank are now oversold and back to their key supports thereby projecting limited downside 

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