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Nifty : 19654

Technical Outlook

* The weekly price action formed a hammer candle, indicating buying demand emerging from 80% retracement of last up move (19230- 20222).

* Going ahead, we expect prolongation of consolidation in the broader range of 19800-19300 range amid escalating geopolitical concern (over Israel and Hamas war). However, we believe, holding above last week’s low of 19300 over next few sessions amid global volatility would keep pullback option open. Thus, we believe stock specific action would prevail as we enter the Q2 earning season

* Indian capital market is in structural bull market. Historically, secondary corrections have been the part of the structural bull market. We believe, recent healthy retracement has helped index to cool off the overbought conditions. Thus, focus should be on accumulating quality stocks amid ongoing global volatility. Our positive bias is based on following observations:

* a) Historically, during secular up move 100 days EMA acts as a strong support. In current scenario as well, buying demand emerged in the vicinity of 100 days EMA

* b) Crude oil will be the key monitorable as pullback in crude is approaching the breakdown area of 3 months rising channel. Thus, decline in crude from higher level would provide impetus for equities

* The formation of higher peak and trough signifies inherent strength that makes us confident to revise support base upward at 19300 as it is confluence of 100 days EMA is placed at 19242 coincided with last week’s panic low of 19333

* Broader markets indices have been undergoing healthy consolidation wherein over past four weeks it retraced less than 50% of preceding 4 weeks’ rally while sustaining above 20 days EMA. The slower pace of retracement signifies robust price structure. Thus, dips should be capitalized to accumulate quality stock

* Sectorally, we remain positive on BFSI, Consumption, Power and PSU baskets while IT, Metal offers favourable risk reward setup

* On the stock front, in large cap we prefer HCL Tech, IndusInd Bank, DLF, Tata Motors, Hindalco, NTPC, L&T, Titan while in midcaps L&T Finance, HEG, Gujarat Industries Power, Balkrishna Ind, Indigo, LTTS, EIH Hotel, ICIL are looking good 

Nifty Bank: 44360

Technical Outlook

* The price action for the week resulted in a Hammer like candle with long lower shadow indicating supportive efforts as prices approached key support zone of 43500 amid oversold conditions .

* We expect index to undergo base formation in the 43500 -45000 band in coming week as prices have approached key support of 43500 (August -September lows and 100 -day ema) amid oversold reading (weekly stochastics of 25 )

* Structurally , Index is undergoing a healthy retracement of entire April -July rally (19 % over 18weeks) in a shallow manner indicating inherent strength

* Our view is backed by following key observations

* Index has retraced 18week rally (38613 -46369 ) by just 38 . 2 % over 11 weeks indicating inherent strength

* 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 downsides

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