NSE (Nifty): 13982

Technical Outlook

* Equity benchmarks traded in a range amid high volatility on account of the monthly expiry and closed on a flat note. Nifty scaled a fresh alltime high of 14,024 and ended the session off the highs at 13982. Broader markets outperformed with market breadth favouring advances with A/D ratio of 1.3:1. Sectorally, pharma, metals, auto and realty outshone. 

* The daily price action formed a high wave candle carrying higher high-low, indicating continuance of positive bias amid rise in volatility

* Going ahead, we reiterate our positive view as we expect the index to head towards our target of 14200 in coming weeks as it is confluence of: a) 138.2% external retracement of entire CY20 decline (12430-7511) placed around 14250 levels b) implied target of past two year’s major trading range 12200- 10000, is at 14200

* Key point to highlight is that the current rally is well supported by revolving sectoral participation and strong market breadth as currently all the Nifty constituents are trading above their 200 days SMA, which augurs well for longevity of the bull trend

* Broader markets on expected lines continued their outperformance as the Nifty small cap has already closed above its past two weeks highs while the Nifty midcap is on the cusp of moving above the same highlighting strength in the broader market. Supported by strong market breadth as currently 96% components of midcap and small cap indices are trading above their 200 days SMA compared to November reading of 90, signifying inherent strength and durability of the current up move

* The formation of higher high-low on all time frames indicates elevated buying demand as intermediate dips were short lived and strong demand emerges at lower levels. The index has support at 13600 as it is confluence of: a) 50% retracement of current up move (13131- 13967), (b) the bullish gap area of 24th December placed at 13601-13626 levels

* In the coming session, Nifty future is likely to open on a flat to positive note. We expect the index to start the New Year on a positive note while maintaining higher high-low. Hence, use intraday dip towards 13970-13995 in Nifty January future for creating long position for target of 14079

NSE Nifty Daily Candlestick Chart

Bank Nifty: 31264

Technical Outlook​​​​​​​

* The Bank Nifty traded in a range with high volatility for a second consecutive session and closed the monthly expiry session on a flat note down marginally by 0 . 1 % . PSU banking stocks witnessed profit booking while the private banking stocks closed on a flat note . The bank Nifty ended the session at 31264 down marginally by 39 points or 0 . 1 % on Thursday

* The daily price action formed a high wave candle which remained contained inside previous session high -low range signalling consolidation with positive bias . The index in the last two sessions is seen forming a higher base above the last two weeks breakout area as can be seen in the adjacent chart highlight overall strength in the index

* Going ahead, we expect the index to resume up move and extend the current rally towards 32100 levels in the coming weeks as it is the confluence of the 161 . 8 % external retracement of the recent breather (30945 -28976 ) and the upper band of the rising channel containing the entire up move since March placed around 32000

* The index during current week has witnessed a faster retracement of the last falling segment as eight sessions decline (30945-28976) was completely retraced in just five sessions. A faster retracement signals robust price structure and extension of the current rally

* The formation of higher high -low on all time frame indicates elevated buying demand as intermediate dips were short lived and strong demand emerges at lower levels . The index has support around 30000 levels being the confluence of : a) 50 % retracement of the current up move (28976 -31359 ) placed at 30150 levels b) The rising 20 days EMA is also placed around 30150 levels c) The bullish gap area of 24th December is also placed at 29941 - 30007 levels

* In the coming session, the index is likely to open on a flat to positive note . We expect the index to trade with positive bias while sustaining above 31000 levels .

* Hence use intraday dips towards 31110 -31180 in Bank Nifty January future for long position for target of 31380 , maintain a stoploss of 31010 Among the oscillators the daily 14 periods RSI has recently generated a bullish crossover above its nine periods average thus supports the continuation of the current up move

Bank Nifty Index – Daily Candlestick Chart

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