We expect index to hold key support zone s to emerge in 44000 -44200 zone - ICICI Direct
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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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