By Dharmesh Shah
Equity benchmarks endured their record-setting spree more than eight consecutive weeks as Nifty hit all-time higher of 17948 in spite of worldwide volatility. The Nifty settled the week at 17853, up 1.5%. The broader markets reasonably underperformed the benchmark as Nifty midcap and modest-cap gained ~.5, each and every. Sectorally, IT, Realty, FMCG outshone although metal continued to underperform more than the week
Nifty Technical Outlook
– The Nifty began the week on a subdued note, on the other hand elevated obtaining demand from essential assistance threshold of 17200 helped index to regain upward momentum and scale to fresh all time higher of 17948. The weekly price tag action formed a bull candle carrying larger higher-low, indicating continuance of positive momentum
– Our structural positive stance for Nifty remains intact as we count on Nifty to surpass psychological mark of 18000 and progressively head towards 18200 in coming month as it is implied target of current consolidation breakout (17800-17325). The constructive stance on the marketplace is based on following observations:
a) The rallies are having elongated followed by shallow corrections as intermediate corrections have been arresting inside 3-4% considering the fact that April 2021, highlighting robust price tag structure
b) Indian equities are anticipated to extend its relative outperformance to worldwide peers as it endured its record setting spree
– We count on Nifty to head towards our target of 18200 in a non-linear manner, as a result advise to stick to obtain on dips technique as we do not count on Nifty to breach robust assistance of 17400 levels
-On sectoral front, BFSI, Consumption, IT & Telecom to outperform although Auto space supply favourable threat-reward setup
– In massive caps we like Infosys, Reliance Industries Ltd (RIL), Asian Paints, Housing Development Finance Corporation (HDFC), State Bank of India (SBI), Piramal Enterprises Ltd, Tata Motors, although in Midcaps we favor Aditya Birla Fashion and Retail, Persistent Systems, Astral, M&M Finance, Bluedart, Indocount, VIP Industries, Triveni Engineering
– We count on broader marketplace indices to undergo healthier consolidation immediately after 15% rally seen more than previous 4 weeks. In the procedure, stock distinct action would prevail with unlock, housing and festive beneficiary themes to be in focus. -Thus, dips must be capitalized to accumulate excellent stocks
Structurally, the formation of larger peak and trough has when once again confirmed the larger base formation at 17400 level which we do not count on to breach as it is confluence of:
a) 80% retracement of previous two weeks up move (17269-17948) at 17405
b) 20 days EMA at 17350, which has been held considering the fact that July 2021
Bank Nifty Outlook
– The Nifty Bank traded in a variety with higher volatility and closed the week on a flat note at 37830 levels. The weekly price tag action formed a modest bull candle with a extended reduced shadow signaling robust assistance at reduced levels. In line with our view, obtain on dips technique has when once again worked effectively as elevated obtaining demand emerged from critical assistance region of 36500
– Going ahead, we count on the index to retain positive bias and progressively head towards our target of 38600 in the coming weeks as it is the price tag parity with the prior two important up move of July (34115-36317) and August (34817-37140) each and every measuring roughly 2250 points added to the current low of 36327 signals upside towards 38600 levels
– Volatility is probably to stay higher in the coming week on account of the month-to-month expiry of the September series and the volatile Asian cues. Buying on decline technique has worked effectively in the last 15 months, thereby the present volatility would present incremental obtaining chance in excellent banking stocks
– The index is seen forming larger higher-low in the bigger degree chart, which offers up confident to revise the assistance base larger towards | 36500-36300 levels as it is the confluence of the following technical observations:
50% retracement of the present up move (34817-38112) placed about 36500 levels
a) The increasing 10 weeks EMA is placed at 36430 level
b) The upper band of the last 3 months variety breakout region is also placed about 36300 levels
c) The last week low is also placed at 36525 levels
– The weekly stochastic stay in a robust uptrend hence supports the positive bias in the index
(Dharmesh Shah is the Head – Technical at ICICI Direct. Please seek advice from your economic advisor just before investing.)
ICICI Securities Limited is a SEBI registered Research Analyst possessing registration no. INH000000990. It is confirmed that the Research Analyst or his relatives or I-Sec do not have actual/useful ownership of 1% or more securities of the topic corporation, at the finish of 22/04/2021 or have no other economic interest and do not have any material conflict of interest. I-Sec or its associates could have received any compensation towards merchant banking/ broking services from the topic providers talked about as clientele in preceding 12 months