Indian benchmarks slide on expiry, IT drags - ICICI Direct
Nifty :25424
Indian equities benchmark witnessed a selling pressure on a monthly expiry session amid renewed global tariff turmoil and intense selling in IT heavyweights. Nifty settle the day at 25424, down 1.10%. However, broader market has relatively outperformed the benchmark as Nifty Mid and Smallcap declined 0.30% and 0.50%. Sectorally, Metals, PSUs banks were the top gainers, wherein IT and Realty were the top laggards.
Technical Outlook:
* Index started the day with a gap-down and snapped its two days of winning streak. The daily price action has formed a sizeable bear candle carrying intraday lower high-low structure, highlighting intraday pullback were short-lived.
* Key point to highlight is that index has witnessed a supportive efforts in the vicinity of 200-day SMA (25,338) that coinciding with its previous week’s low, indicating as near-term strong support.
* On a broader perspective, over past two-weeks, index has been consolidating within a falling channel formation after a sharp rally seen in early February month. Going ahead, a decisive breakout above the upper band of this channel (25,800) could trigger a fresh directional upmove. Failure to do so may extend the ongoing consolidation, which would further strengthen the base and provide launchpad to challenge All time high (26350) in coming month.
* In this process bouts of volatility cannot be ruled out ahead of geopolitical worries. Hence, any decline from current level should be use to accumulate quality stocks backed by strong Q3 results. As strong support is placed around 25,200 being 200-day EMA coincided with 61.8% retracement of recent up move (24572- 26341).
* On broader market front, Nifty Midcap index has witnessed a hammer-like candle in the vicinity of 200-day EMA, coinciding with 50% retracement of its recent upmove, indicating strong support at elevated levels. The current up move is backed by the improvement in the market breadth as currently 46% of stocks of Nifty 500 universe are sustaining above their 50-day SMA compared to early Feb reading of 20%. Such improvement in the market breadth warrants broadening of rally going ahead
Key Monitorable:
* The brent crude would be the key monitorable going forward amidst renewed geopolitical tension, that pulled it around falling resistance trendline placed at $72 range. A decisive close above $72 would fuel the momentum for next leg of up move that can add pressure on emerging markets like India
Intraday Rational:
* Trend- consolidation range 25200-26000
* Levels- Buy around 80% retracement level of previous session range
Nifty Bank :61047
* Index ended the day on negative note down 0.35 at 61047. Nifty PSU Bank outperformed gaining 0.3% and made new All time High at 9890.
Technical Outlook:
* Index began the day with gap down opening and witnessed profit booking around previous session high. Consequently, daily price action formed a bearish candle with longer lower shadow, indicating heightened volatility at elevated levels.
* Key point to highlight, is that PSU Bank index has scaled a fresh all-time high, primarily driven by strength in largecap PSU banking stocks. Notably, the momentum is now broadening, with several mid-cap PSU banks delivering decade-long breakouts, signaling structural participation beyond the frontline names.
* BankNifty index remains structurally stronger than the frontline index. While Nifty trades nearly 3.5% below its record, Bank Nifty is positioned near its lifetime high, indicating relative outperformance. Therefore, a deceive close above 61800 (all-time high) would fuel further momentum that would open the door for next leg of up move. Failure to do so would lead to continuation of consolidation near its all-time high (61800-59700) that would make market healthy).
* Volatility is likely to remain elevated because of geopolitical uncertainty, therefore any corrective declines from current levels should be viewed as buying opportunities as strong demand zone is identified near 59,700, being 50-day EMA and 61.8% retracement of the current up move (57,783-61,674).
* Intraday Rational:
* Trend- Supportive efforts around 20-day EMA
* Levels - Buy around 80% retracement of previous session range
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