IGI Logo

Nifty : 22699

Technical Outlook

Day that was ..

The equity benchmark extended its corrective phase, as a surge in US 10- year treasury yields and fluctuating crude oil prices dented market sentiment. Nifty ultimately settled at 22,699, down 51 points (0.22%). However, the broader markets significantly outperformed the benchmark today, with the SmallCap index surging around 1% and the MidCap index up around 0.5%. Sectoral performance remained mixed; Auto, Pharma led the gains, while IT and Realty took a breather.

Technical Outlook :

• The index opened with a gap-down at 22,678 and slid southward during early trade, hitting an intraday low of 22,497. While supportive efforts from 61.8% retracement of recent rally (22180-23175) it staged a sharp midday recovery and attempted to hold the 22,700 threshold. Consequently, it formed another high wave candle by the end of the day, with a long lower wick indicating rise in volatility.

• Over past five session, index has been retreating from overhead resistance of 22800. Thereby, a decisive close above 22800 is crucial to signal a pause in the ongoing corrective phase and validate a push toward the 23,100 milestone. Conversely, a failure to break higher will prolong the consolidation in 22800-22200 zone.

• Despite persisting global headwinds, the Nifty continues to defend its vital long-term 200-week EMA over past five weeks. Historical market data over the past 25 years indicates that outside of structural catastrophic events (such as 2001, 2008, and 2020), the median decline below 200 weeks EMA typically stalls at 3%, making equity accumulation during these panic periods historically garnering 10% over next 3-to-6-month.

• From a price-wise perspective, the ongoing structural bull market correction mirrors the previous eight major drawdowns seen over the last 25 years, which concluded with an average downside of approximately 17%. With the index having corrected roughly 16% from its January lifetime peak of 26,373, further systemic downside risks appear be limited.

• Structurally, The 23,100 zone persists as the dominant overhead resistance, above which the doors open for a relief extension to 23,500. Until this pivot zone is thoroughly reclaimed on a closing basis, Nifty is expected to remain stuck within a broader, volatile consolidation envelope between 23,100 and 22,200.

• Daily price action is anticipated to experience elevated volatility waves under the weight of heightened Middle East geopolitical tensions, surging Brent crude oil prices hovering near $116 per barrel, and cautious positioning ahead of both the US Fed policy decision and the upcoming US Midterm elections. Under extreme volatility, strong support stands firm at 22,200–21,700, aligning with the critical 61.8% Fibonacci retracement level of the macro rally and the key structural low

Intraday Rational :

Trend – High wave candle near short term moving average signifies prolonged consolidation

Levels – Buy around 80% of Wednesdays range

Nifty Bank : 53974

Technical Outlook

Day that was :

Bank Nifty recouped intraday losses and settled the volatile session on a positive note, up 0.5%. Meanwhile, the Nifty PSU Bank relatively underperformed by gaining 0.1% for the day

Technical Outlook :

• The index started the day with a negative gap. However, supportive efforts from 53700 zone helped index to recover 800 points from days low. The daily price action resembles a piercing line candle with a sizable bull candle carrying lower high-low, indicating abating corrective bias.

• Going ahead volatility is likely to remain elevated ahead of US mid-term election. Amidst such volatility a decisive close above previous session high is necessary (which has been absent over past eight sessions) to pause the corrective phase and in turn open the door for pullback

• In the process, only the breach of immediate support of 53800 (on a closing basis) would result into extended correction wherein next support is placed at 53000 being 61.8% retracement of Apr-Jun rally (49950-58700)

• Nifty PSU Bank Index continues to find support in the vicinity of 52 weeks EMA which has been respected over past seven months. The formation of higher high-low on the weekly chart would open the door for meaningful pullback.

Intraday Rational :

• Trend - Robust recovery from key support of 53800 confirms strong support zone

• Levels : Buy around 80% of Wednesdays range

Please refer disclaimer at https://secure.icicidirect.com/Content/StaticData/Disclaimer.html

SEBI Registration number INZ000183631