On anticipated lines, Nifty regained upward momentum immediately after approaching maturity of value/time sensible correction. The acquiring demand emerged from an elevated assistance base of 15600 that helped index to resolve out of previous 5 weeks consolidation (15900-1500). As a outcome, our purchase on dips technique worked properly. The weekly value action formed a bull candle with tiny reduce shadow, indicating resumption of principal up trend. In the course of action, broader market place indices continued to outperform the benchmark and clocked a fresh all-time higher.
– The index has maintained the rhythm of not correcting for more than 3 consecutive weeks considering that April 2020, signifying inherent strength. The breakout from prolonged consolidation indicates rejuvenation of upward momentum that tends to make us think Nifty would challenge the psychological mark of 16000 in the coming truncated week and ultimately head towards our revised target of 16300 in coming month. In the course of action, short-term bouts of volatility would give incremental acquiring chance. Thus, dips from hereon ought to be capitalised on to accumulate excellent stocks amid progression of Q1FY22 earning season. Our earmarked target of 16300 is based on following observations:
a) Implied target of current consolidation (15900-15500) breakout is placed at 16300
b) 138.2% extension of mid-June rally (15450-15915), projected from July low of 15633, placed at 16284
– On the sectoral front, we anticipate BFSI, IT, Infra, Realty and Metals to lead the rally whilst Auto and Consumption space offers margin of security at existing levels
– Our preferred massive cap picks are Axis Bank, Bajaj Finance, Infosys, Asian Paints, Hindalco, Ultratech Cement, M&M whilst, in midcaps we like Havells, Birla soft, Vardhaman Special steel, Mahindra life, Indocount industries, Glenmark Pharma, PNC Infra, Sandhar Technologies, Interglobe aviation
– The Nifty midcap and tiny cap indices endured their relative outperformance against benchmark. Formation of greater peak and trough supported by sturdy market place breadth signifies inherent strength which augurs properly for durability of ongoing up move
– Structurally, the breakout from previous one month consolidation has confirmed the sturdy greater base formation at 15600-15500 zone which we do not anticipate to breach as it is confluence of:
a) 80% retracement of June-July rally (15450-15962), at 15500
b) 10 weeks EMA placed at 15560
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– The index gained for the second consecutive week and closed greater by 2%. The weekly value action formed a bull candle with a greater higher-low and a close at the upper band of the last six weeks variety (35800-34000) signalling strength and continuation of the up move on anticipated lines
– Going ahead, we anticipate the index to challenge psychological mark of 36000 in coming truncated week and ultimately head towards 36600 in coming month as it is the confluence of the earlier main higher of March 2021 and the 138.2% external retracement of the last six weeks’ breather (35810-33908)
– In line with our view the index is seen creating a breakout above the last six weeks variety as value action has been contracting more than previous 3 weeks suggesting that breakout from this consolidation is approaching. We anticipate index to breakout on the greater side offered shallow retracement and robust value structure
– The formation of greater higher-low in the weekly time frame offers us confident to revise the assistance base greater towards 34800 being the confluence of the following technical observations:
a. The 80% retracement of the existing up move (34632-35985) placed at 34900
b. The worth of the increasing demand line joining main lows considering that May 2020 is placed about 34850
c. The increasing 50 days EMA is also placed at 34790 levels
– Among the oscillators the weekly stochastic has cooled off from the overbought territory and has generated a purchase signal moving above its 3 periods typical hence validates positive bias in the index
(Dharmesh Shah is the Head – Technical at ICICI Direct. Please seek the advice of your economic advisor prior to 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/advantageous ownership of 1% or more securities of the topic business, 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 businesses talked about as consumers in preceding 12 months