By Dharmesh Shah
In the week gone by, equity benchmark Nifty 50 extended its record-setting spree more than the second consecutive week as it scaled to new higher of 16543. Nifty settled the week at 16529, up 1.8%. However, broader market place indices extended breather as Nifty Midcap, tiny cap lost 1% and 2%, respectively. Sectorally, IT and financials remained at forefront when pharma took a breather.
Nifty Technical Outlook
– The index began the week on a subdued note and steadily accelerated upward momentum on anticipated lines right after surpassing 16300 mark. The weekly price tag action formed a bull candle carrying larger higher-low, indicating the continuance of positive bias. In the method, broader market place indices have undergone profit booking right after current relative outperformance and at present poised at essential assistance of 50 days EMA
– The adhere to-by way of strength post two months consolidation breakout backed by leadership in banking, IT and Telecom, metals (which represent more than 50% weightage in Nifty) signifies inherent strength that tends to make us confident to revise our target to 16900 for coming month as it is 161.8% extension of mid-June rally (15450-15962) projected from July higher of 15962. In the method, bouts of volatility at larger levels right after current sturdy run-up cannot be ruled out which would give incremental purchasing chance, as purchasing on declines tactic has worked effectively more than previous 15 months. In the upcoming truncated week, we count on index to head towards our earmarked target of 16600.
– Our preferred sectors are BFSI, IT & Telecom, Metals, Realty and Consumption
– On the stock front, in huge caps, we like TCS, Kotak Mahindra Bank, HDFC (Housing Development Finance Corporation), Bharti Airtel, Tata Steel, Titan Company, Reliance Industries Ltd (RIL) when in midcap space, we choose, Mastek, Trent, Bharat Forge, Chambal Fertiliser, Escorts, Cummins, Radico Khaitan, Indocount Industries
– The Nifty midcap and smallcap indices maintained the rhythm of not correcting for more than 10% when sustaining above 50 days EMA, considering that June-20. In the present situation as effectively, each indices arrested an ongoing corrective phase close to 50 days EMA right after correcting 6% & 8%, respectively from their all-time highs. We count on, broader market place indices to undergo base formation above 50 days EMA that would set the stage 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 revise assistance base upward at 16100, as it is confluence of:
a) Positive gap recorded on 4th August (16131-16176)
b) Last week’s low is placed at 16162
Bank Nifty Outlook
– The weekly price tag action formed a bull candle with a larger higher-low signalling continuation of the up move. The index in the course of earlier week formed a larger base above the current eight weeks’ consolidation breakout location which also coincides with the falling provide line breakout location joining highs considering that February 2021 (placed at 35600 levels) highlighting strength
– Going ahead, we count on the index to extend the present up move and steadily head towards the all-time higher of 37700 levels in the coming month as it is the measuring implication of the current variety breakout (35800-34000)
– In the last seven sessions the index has retraced much less than 38.2% of its earlier 5 sessions up move (34115-36219). A shallow retracement post a sharp up move highlights a larger base formation and a robust price tag structure
– Structurally, the formation of larger peak and trough on the bigger degree chart tends to make us confident to revise assistance base upward at 35000 as it is confluence of:
a) 61.8% retracement of the present up move (34115-36317) placed about 35000 levels
b) increasing 10 weeks EMA placed about 35180 levels
c) The bullish gap location 4th August 2021 is also placed about 35200 levels
Among the oscillators, the weekly stochastic has rebounded from close to the neutral reading of 50 and has generated a invest in signal moving above its 3 periods typical hence validates positive bias.
(Dharmesh Shah is the Head – Technical at ICICI Direct. Please seek the advice of your monetary advisor ahead of 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/helpful ownership of 1% or more securities of the topic corporation, at the finish of 22/04/2021 or have no other monetary interest and do not have any material conflict of interest. I-Sec or its associates could possibly have received any compensation towards merchant banking/ broking services from the topic providers pointed out as consumers in preceding 12 months