The index started the session on a positive note with a gap up action led by firm global cues – ICICI Direct

Nifty : 17722

Technical Outlook

• The index started the session on a positive note with a gap up action led by firm global cues led by private banking heavyweights. While part of the gains were surrendered mid-way through the session, further rally in second half in rate sensitives led index to close comfortably above key hurdle and higher band of downward slopping channel placed around 17650 levels. As a result, daily price action formed a bull candle with higher high-low indicating continuation of upward trend and only a decisive close below previous session low would indicate pause in upward momentum and healthy retracement of rally

• In the process daily stochastics has reached overbought trajectory after more than 900 points rally from March lows and now poised to challenge March 2023 highs placed at 17800 levels. We expect index to eventually resolve towards 18100 levels in April 2023 and short term dips should be used as an incremental buying opportunity. Our structurally positive view is further validated by following observations:

• a) The current pullback of 920 points is strongest in magnitude since life highs recorded in December 2022, indicating structural improvement

• b) On the momentum indicator front, Rate of Change indicator is at 5 month high (on multiple parameters), indicating revival in upward momentum

• c) On larger time frame, monthly stochastic around 25 in March was at its bearish extremes making a strong case for meaningful gains over next three months

• d) Current up move was backed by robust market breadth as 80% components of Nifty 500 universe have given positive returns during this period, while percentage of stocks above 200dma has improved from a low of 32 in March to current reading of 43 marking stark improvement

• e) VIX and trajectory of yields, domestically and globally, pointing towards favourable environment for risk assets especially equities

• f) US dollar index trending down with lower high low on monthly charts, a positive for EM equities. Further breakdown below 100 would lead to acceleration of inflows

• We expect broader markets to witness catch up activity as Nifty midcap and small cap indices are sustaining well above their past two weeks high, indicating resumption of upward momentum

• Structurally, the formation of higher high-low on the weekly chart makes us confident to elevate short term support base at 17300 as it is 50% retracement of recent pullback (16828-17748) coincided with prior week’s low (17312)

• In the coming session, index is likely to open on a flat to positive note amid firm global cues. We expect index to trade with positive bias with immediate hurdle placed at 17800 levels ahead of the US CPI numbers. Bias remain positive with higher high-low hence, use intraday dips towards 17705-17737 in April future for creating long position for target of 17819, with a stoploss at 17667


Nifty Bank: 41366

Technical Outlook

• The daily price action formed a bull candle with a higher high -low signalling continuation of the overall positive bias .

• Going ahead, we expect the index to maintain positive bias and head towards 42000 levels in coming weeks being the confluence of the high of February 2023 and 61 . 8 % retracement of the entire corrective decline (44151 -38613 )

• Index has already seen a up move of more than 2100 points in just three weeks which has lead to daily stochastic at overbought territory with a reading of 83 hence a couple of days of breather cannot be ruled out . However, immediate bias continues to remain positive as index is forming higher high -low in all time frames

• Bank Nifty/Nifty ratio line continues to trend higher and sustain the above major breakout area signalling continuation of the outperformance

• The index has support at 40000 levels being the confluence the bullish gap up area of 29th March 2023 and the 50 % retracement of the last three weeks pullback (38613 -41274 )

• The weekly stochastic has recently generated a buy signal and is sustaining above its three periods average thus supports the overall positive bias in the index

In the coming session, the index is likely to open on a flat to positive note amid firm global cues . Index is expected to trade with positive bias while maintaining higher high -low . Hence use intraday dips towards 41130 -41210 for creating long position for the target 41470 , maintain a stoploss of 41030


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