Nifty 50 has remained variety-bound among 15,950-15,450 levels for a number of weeks now, struggling to attain 16,000. However, this consolidation is probably to outcome in robust base formation at 15,450 assisting the Nifty 50 touch fresh all-time highs at 16,300, stated ICICI Direct in a note. “Current strong base formation will act as a launchpad for the next leg of up move within a structural uptrend. Going ahead, a decisive close above 15,950 with multi-sector participation would confirm the resumption of primary uptrend and accelerate upward momentum to 16,300,” they added. Any correction beyond 15,450 is seen by ICICI Direct as an extended bull industry correction and not as a damaging.
Nifty gearing up for 16,300
Analysts at ICICI Direct think that the Nifty is signalling a robust value structure. “Nifty has undergone shallow retracement as over the past seven weeks it merely retraced 23% of preceding eight week’s rally, signalling robust price structure. We expect the ongoing consolidation to act as a base for the next leg of up move within the structural bull trend,” they added. The brokerage firm stated that a decisive close above 15,950 supported by multi-sector participation would confirm the resumption of main uptrend and accelerate upward momentum to 16,300 levels.
In the occasion of a breach under the reduced band of consolidation, at 15,450, due to international volatility, ICICI Direct expects a short-term panic sell-off but cautions that this ought to not be construed as structurally damaging. “Instead dips should be capitalised on to build a quality portfolio from a medium-term perspective as we do not expect the index to breach the key support threshold of 15100…” they added.
Bank Nifty value structure positive
Coming to Bank Nifty, ICICI Direct stated the index has retraced just 50% of its May rally more than the previous eight weeks signalling a positive value structure. “Lack of faster retracement in either direction signals extension of ongoing consolidation with positive bias in the broader range of 33,900-35,900,” they added. A decisive close above 35,900 would confirm the resumption of uptrend, ICICI Direct stated.
Sectors that might outperform
In terms of sectoral efficiency, the note highlights that Information Technology stocks along with metals are placed in the outperforming quadrant and are anticipated to continue with their positive momentum. “Bank index has consolidated for the last two months, with banking stocks placed at a support level, thus providing favourable risk-reward setup,” they stated. Capital goods and Auto stocks are seen to be bargain buys following the current breather.