The index began the week on a positive note, finding support at the 20-day EMA - ICICI Direct
Nifty :24092
Indian equity benchmarks ended the session on a strong note, snapping a threesession losing streak tracking positive global cues. The Nifty 50 closed at 24,092, gaining 194 points. Market breadth turned positive with an advance-decline ratio of 3:1. Broader markets relatively outperformed the benchmarks, with the Nifty Midcap and Smallcap indices gaining 1.50% and 1.90%, respectively. Sectorally, all major indices closed in the green, with Pharma, Consumer Durables, and Realty emerging as the top gainers.
Technical Outlook
* The index began the week on a positive note, finding support at the 20-day EMA. The daily price action formed an "inside bar" pattern, indicating consolidation within the Friday’s trading range.
* Nifty is likely to open gap-down on back of negative global cues and rise in crude oil prices .A key takeaway is that the index witnessed strong buying demand from both its short-term 20-day EMA and the crucial gap area (23,900–24,145), signaling supportive efforts emerged at elevated levels. Moving forward, a follow through strength above the Friday’s high of 24,206 would confirm the end of the recent three-session corrective phase. Failing which will result into consolidation within the broader range of 24,500-23,400 range while sailing through geopolitical volatility and reacts to the ongoing corporate earnings season.
* This consolidation would make market healthy, as it strengthens the market’s foundation for an eventual push toward the 24,800 mark (aligned with the 200-day EMA) in the coming weeks. Thereby, any decline from hereon should not be construed as negative instead capitalize it to accumulate high-quality stocks on dips backed by strong earnings as strong support is placed at 23400, being 61.8% retracement of current up move (22182-24601) coincided with the gap aera (23555-23154).
Our constructive bias is further validated by following observations:
* The formation of higher peak and trough on the weekly chart signifies rejuvenation of upward momentum.
* The current up move is backed by the improvement in the market breadth as the current reading of % stocks trading above 50- and 200-days SMA has jumped to 67% and 40% compared to last month reading of 15%, signaling broadening of rally that bodes well for durability of ongoing up move.
* We expect broader market to relatively outperform the large caps as the ratio chart of Nifty500 vs Nifty 100 has resolved higher and at the cusp of breaking out of past two years consolidation. Such breakout would result into acceleration in Midcap and small caps outperformance going ahead.
* From a global market perspective, the S&P 500's recent breach of the historic 7,000 level and Nikkei and Kospi’s fresh move towards all-time highs signal robust momentum. We expect the Indian markets to witness catch up activity as it has direct co-relation with the global peers.
Key Monitorable:
A. De-escalation of geopolitical conflict
B. Q4 earning season
C. US Fed Policy
D. IIP data
E. Further decline in Crude, US Dollar Index
Intraday Rational:
* Trend – Supportive efforts from 20-day EMA
* Levels - Buy around 80% of current upmove (23625-24604)
Nifty Bank :56264
The Bank Nifty Index ended snapped its three-day losing streak and closed on a positive note tracking mixed global cues and settle at 56264 up 0.37%
Technical Outlook:
* Index started the week on a positive note and retraced 80% of previous day up move and traded in a narrow range of around 500 points . The daily price action resulted into Inside bar candle in vicinity of 20-day EMA.
* Going ahead follow through strength above Fridays high (56475) will confirm conclusion of corrective phase and we expect Index to gradually resolve higher and head towards 57800 in the coming weeks being previous support will now act as resistance (change of polarity principle)
* On the weekly charts stochastic oscillator is in overbought territory with a reading of ~87 levels, indicating possibility of near-term breather that would make the markets healthier and set stage for next leg of up move. Therefore, any decline from current level should be used to accumulate quality banking stocks backed by strong Q4 earnings as strong support is now placed around 54500 being 38.2% retracement of current up move(54356-57456).
* Nifty PSU Bank has been forming higher base above 100-week EMA place at 8640 levels which would set the stage for next leg of up move towards 9500 levels (being 80% retracement of entire decline (9918-7834)
Intraday Rational:
* Trend- Supportive efforts around 20-day EMA
* Levels- Buy around 80% of current up-move (54606-57477)
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