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Nifty : 23985

Technical Outlook

Day that was .. The Nifty gained 250 points (1.1%) to settle the Wednesday’s session at 24250, ahead of US Fed meet. Market breadth turned out to be in favor of advances with an (A/D) ratio of 2:1. The Smallcap index continued with its relative underperformance, up 1.5%. Sectorally, IT, Metal, Consumer Durables remained at forefront while realty, auto took a breather.

Technical Outlook :

• Nifty endured it northbound journey after witnessing a gap up opening. The daily price action formed a bull candle, indicating extension of ongoing up move.

• Index is likely to start the session on a negative note tracking subdued global cues amid Geopolitical conflict and Fed Policy outcome. Nifty extended its recovery over fourth session and staged a decisive breakout from three weeks falling trend line and successfully reclaimed its 100 days EMA, Indicating resumption of uptrend. The evolving price structure strongly signals that index would eventually challenge the upper band of consolidation (placed at 24600) in the coming month. Meanwhile, formation of higher high-low makes us confident to revise support base upward at 23800 being 80% retracement of current up move (23606-24283) coinciding with upward sloping support trend line placed at 23760.

• On a broader market perspective, Both Mid and Small-cap index staged a strong rebound after retesting its multi-year trendline breakout area. The current up move is backed by the improvement in the market breadth as currently 58% stocks are trading above their 50 days EMA (within the Nifty 500 universe) compared to past three weeks reading of 48% that bodes well for durability of up move

• Structurally, the Nifty has been consolidating within a 1,500-point over the past quarter. Defending the pivotal 23,600 mark is crucial to establish a higher base, which would set the groundwork for the next leg of the secular uptrend.

• USD-INR has formed double top formation pattern in a weekly timeframe along with negative RSI divergence in place. Hence, further appreciation in Rupee would act as positive catalyst for Indian equities

Key Monitorable :

a) The AI/Semiconductor induced rally in North Asian markets (Kospi, Nikkei) is now showing sign of exhaustion, resulting into extended profit booking. Conversely, this rotation could benefit growth-oriented economies like India.

b) Historical data of Brent crude oil suggest that bounce after a sharp decline in amid geopolitical conflict (Iraq war, Russia Ukraine 2022) typically cap around 40%. In the current scenar1990-91io, Crude has rallied over 44% from recent low of $70 and retreated from the $100

c) Empirically, after such a pattern crude undergoes consolidation and eventually revisits the panic low in subsequent quarters. Therefore, we believe falling crude oil would be the primary catalyst to reignite momentum in equities

Intraday Rational :

• Trend – Formation of higher high-low structure in daily time frame, indicating positive bias.

• Levels – Buy around 50% retracement of last 2 days range.

Nifty Bank : 57206

Technical Outlook

Day that was : Bank Nifty ended higher on start of new series up 0.8% at 57206 on back of mixed global cues.

Te chnical Outlook :

• Index opened with breakaway gap and continued to inch northwards where intraday pullback were brought into and closed higher at 56756 levels. Consequently, the daily price action resulted into small bull candle with higher high higher low, indicating positive bias.

• Going ahead follow-through strength above Monday’s high (57330) coinciding with 20-day EMA would lead pullback towards 58500 levels being July highs.

• We expect, index to hold the key support zone of 56000- 55500 and gradually head towards upper band of consolidation placed at 58500 in coming month. The key support zone of 56000-55500 is a placement of the 38.2% retracement of entire rally (49954-58706) and gap-area is placed around 55,500 levels.

• Another observation is that over last 3 weeks Index has retraced by 38.2% of earlier 3 weeks rally, indicating slower pace of retracement which would help to set stage for next leg of rally.

• PSU Bank Index has formed Inside bar consolidating above 200-day EMA. Going ahead follow through strength above Mondays(8423) high would set the stage towards 8700 levels

Intraday Rational :

• Trend - Supportive efforts emerged from the lower band of the contracting triangle

• Levels – Buy around 50% retracement of last 2 days range

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