By Dharmesh Shah
Equity benchmarks regained upward momentum and witnessed the highest weekly closing on Nifty at 16705, up 1.5%, last week. The broader industry indices snapped previous two weeks’ corrective phase and somewhat outperformed the benchmark as Nifty midcap, smaller cap rose 2%, every. Sectorally, IT, metal, financials outshone when auto took a breather
Nifty technical outlook
– The Nifty began the week on a buoyant note and progressively scaled to a fresh all time higher of 16713. The weekly price tag action formed a smaller bull candle carrying larger higher-low, indicating resumption of upward momentum soon after last week’s breather. In the procedure, on anticipated lines broader industry indices have maintained the rhythm of maturity of price tag/time sensible correction
– Going ahead, we reiterate our consecutive stance as we anticipate the index to resolve above previous two weeks’ consolidation (16700-16400) and progressively head towards our revised target of 17000-17200 in the coming month aided by firm international cues. Thereby any volatility from right here on would present an incremental purchasing chance to personal top quality significant and midcap stocks. Our target of 17000-17200 is based on following observations:
a) Implicated target of previous two weeks consolidation (16700-16400) is placed at 17000
b) Since January 2021, twice Nifty has seen 1800 points rally (through Jan-Feb=1835 points and Apr-Jun=1764 points). – In existing situation, Nifty would comprehensive 1800 points move at 17200 projected from June low of 15450.
– Sectorally, we anticipate IT, Infra, Capital goods and Consumption to outperform, when BFSI & Auto stocks are poised for technical pullback from oversold trajectory
– On the stock front, we like Axis Bank, HDFC, United Spirits, Titan, Reliance Industries, Ambuja Cement, Info Edge in significant cap, when in Midcaps we choose Persistent System, Bajaj Electricals, Timken, Fortis, Trent, Grindwell Norton, Orient Cement, Navin Fluorine, Mahindra Logistics.
– In line with our view, Nifty midcap and smaller cap indices maintained the rhythm of not correcting for more than 10% and arresting corrective phase inside 3 weeks in a row. In existing situation as nicely, each indices have arrested corrective phase inside 3 consecutive weeks soon after correcting 6% & 10%, respectively from their all-time highs. The supportive efforts in the vicinity of 50 days EMA make us think the broader industry indices would undergo base formation that would pave the way for next leg of up move
– Structurally, the formation of larger peak and trough on the bigger degree chart tends to make us confident to retain assistance base at 16100, as it is confluence of:
a) positive gap recorded on August 4 (16131-16176)
b) 10 week’s EMA is placed at 16120
c) previous 3 week’s low is placed at 16162
Bank Nifty Outlook
– The Nifty Bank witnessed a rebound soon after earlier week decline and closed the week larger by more than 1.5%. The weekly price tag action formed a higher wave candle with a lengthy reduce shadow signaling robust assistance at reduce levels about 34800-34500 levels
– Going ahead, we anticipate the index soon after the current healthier base formation to breakout above the upper band of the variety (36300) and head towards 37700 levels in the coming month as it is the confluence of the measuring implication of the current variety (36300-34800) and the earlier all-time higher of February 2021
– In the smaller sized time frame the index in the last 15 sessions has retraced just 61.8% of its earlier 5 sessions up move (34115-36219). A shallow retracement highlights a larger base formation and a positive price tag structure
– We do not foresee index to breach robust assistance of 34500. Buying the declines technique has worked nicely more than previous 15 months. Hence, any corrective decline in the coming week would give incremental purchasing chance in top quality banking stocks. The assistance base of 34500 is the confluence of the
a) 80% retracement of the existing up move (34115-36317) placed about 34500 levels
b) increasing 20 weeks EMA also placed about 34614 levels
c) the last two weeks’ lows are also placed 34800 levels
– Among the oscillators, weekly stochastic rebounded from the neutral reading of 50 and is seen forming a base above its typical hence validates positive bias
(Dharmesh Shah is the Head – Technical at ICICI Direct. Please seek advice from your economic advisor ahead of investing.)
ICICI Securities Limited is a SEBI registered Research Analyst getting registration no. INH000000990. It is confirmed that the Research Analyst or his relatives or I-Sec do not have actual/effective 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 may possibly have received any compensation towards merchant banking/ broking services from the topic providers described as consumers in preceding 12 months