IGI Logo

Nifty : 24080

Technical Outlook

Day that was ..

Equity benchmark edged lower as escalated geopolitical tension weighed on the market sentiment. Nifty lost 95 points to settle at 24080. Midcap index relatively outshone by gaining 0.25%. Sectorally, Private Banks, pharma remained at forefront while Metal seen extended profit booking.

Technical Outlook :

• Nifty started the session on a subdued note. However, supportive efforts from psychological mark of 24000 helped index to recover some of initial losses. As a result, weekly price action resulted in a hammer like candle, indicating buying demand at elevated support base.

• The Nifty has been oscillating in 24400-24000 range over past 11 sessions. With past four session corrective phase Nifty has approached lower band of consolidation amid oversold territory( Daily stochastic is placed at 19). Thereby, a decisive close above previous session high would confirm pause in corrective phase and head towards upper band of consolidation placed at 24400. Failure to hold 24000 (on a closing basis) would result in extended correction wherein strong support is placed around 23600 as it is placement of 50% retracement of Apr-Aug rally (22182-24774).

• Structurally, past five months trading activity has been confined in entire March month’s trading range (24989-22284). Such prolonged range contractions are rare which systematically set the stage for a directional move. Hence, as long as index holds swing low of 23600, we believe buy on dips structure remains intact

• Past two decades of historical data suggest that September has been the volatile month. However, such volatility has paved the way for direction move in subsequent months

• Smallcap index has logged an impressive ~35% rally off April low and reclaimed its all time high after 18 months. The historical data suggest that this is the initial leg of multi-year secular bull run rather than an overextended technical move. We believe that current up move has laid the foundation for a secular up move Our bullish outlook on the broader market is anchored by following key observations:

• A) Major corrections of ~35% or more have historically marked the beginning of a fresh market up-leg rather than the end of the broader bull cycle

• B)Post such correction, uptrends have sustained for subsequent ~20– 22 months on average, with significant rally in subsequent year

• C)With current rally (~35%) only five months of its expansion, history suggest that we are just starting the secular up move, where the largest gains are yet to unfold

Key Monitorable :

• Monthly Auto sales number

• Positive Geopolitical Development

• Declining crude oil prices

Intraday Rational :

• Trend – Strong buying demand from 4 months rising trend line confirms robust price structure

• Levels – Buy around 80% retracement of last 7 day range

Nifty Bank : 58025

Technical Outlook

Day that was :

Bank Nifty ended the last day of August month on positive note up 0.92% at 58025 on back of mixed global cues.

Technical Outlook :

• The Index started the week on negative note and thereafter found supportive efforts in vicinity 50 days EMA helped index to regain upward momentum and close above previous session high. As a result, the daily price action formed strong bull candle engulfing previous session candle, indicating positive bias.

• Index has witnessed approached near the breakout area of falling trendline place around 58000. Going ahead sustenance above 58000 levels (on a closing basis) would be required for resumption of uptrend which would help index to challenge the swing high of 58700 and extended the up move in coming weeks. Failure to do so would result into extended consolidation in 58000-56700 zone.

• In the process, strong support is placed around 56700 being the placement of four months rising trendline coincided with 200 days EMA .

• The PSU Bank Index formed bullish hammer like candle at 50-day EMA indicating elevated buying demand. Going ahead, follow through strength above last week (8744) high would open the door for next leg of up move towards 9100 levels

Intraday Rational :

• Trend - Prolongation of consolidation in vicinity of 50 days EMA, indicating positive bias

• Levels : Buy around 80% retracement of last 7 day range

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

SEBI Registration number INZ000183631