By Dharmesh Shah
Equity benchmarks endured their record setting spree more than fifth consecutive week as Nifty scaled to fresh all time higher of 17340. The Nifty settled the week at 17324, up 3.7%. The Nifty midcap and smallcap indices outperformed the benchmark by gaining 4%, each and every. Sectorally, all big indices ended in green led by BFSI, Consumption, Telecom, Infra and realty
Nifty Technical Outlook
The Nifty began the week with a positive gap (16705-16765) and continued to march upward, which helped the Nifty to obtain its target of 17200 (as discussed in month-to-month report). The weekly cost action formed a sizable bull candle carrying larger higher-low, indicating acceleration of upward momentum soon after previous two week’s consolidation (16700-16400) breakout. In the method, Nifty midcap index scaled to a fresh all time higher
The formation of larger peak and trough supported by across sector participation signifies inherent strength that tends to make us confident to reiterate our positive stance and anticipate Nifty to head towards our revised target of 17600 in September 2021 as it is the cost parity of July – mid August rally (15515-16700), projected from mid-August low of 16376. However, the upward journey will be nonlinear and get on declines technique should really work nicely as the bouts of volatility at larger levels can not be ruled out soon after previous 5 week’s 12% rally which hauled everyday and weekly stochastic oscillator in overbought territory. In upcoming truncated week, any short-term breather should really be capitalised to accumulate excellent stocks as more than previous 15 months acquiring on declines technique has worked nicely for equity investors
Sectorally, we anticipate BFSI, Capital Goods, Consumption, Infra and Telecom to outperform, though Metal & Auto sectors provide favourable danger-reward at existing juncture
In substantial caps we like Reliance Industries Ltd (RIL), SBI (State Bank of India), Kotak Mahindra Bank, Tech Mahindra, Titan. though in Midcaps we choose Godrej Properties , Canara Bank, Happiest Minds Technologies, Zensar Technology ,Concor Navin Fluorine, Cummins India
On anticipated lines, broader industry indices regained upward momentum as Nifty midcap index scaled to a fresh all-time higher. However, Nifty smaller cap index is just 2% away from its all-time higher. We think, the smaller cap index has formed a larger base above 50 days EMA (which has been held due to the fact June 2020) and anticipate it witness catch up activity in coming weeks
Structurally, as per classic Dow Theory, the formation of larger higher and low, signifies continuance of positive bias which tends to make us confident to revise assistance base upward at 16900, as it is 50% retracement of existing up move (16376 -17340)
Bank Nifty Outlook
The Nifty Bank gained for the second consecutive week and closed larger by more than 3%. The weekly cost action formed a sturdy bull candle with a larger higher-low, the index in the method registered a resolute breakout above the last 4 months’ consolidation variety (36300-34000) signaling continuation of the positive trend
Going ahead, we anticipate the index to sustain positive bias and progressively head towards 37700 levels in the coming weeks as it is the confluence of the measuring implication of the current variety breakout (36300-34800) and the preceding all-time higher of February 2021
The index has not too long ago witnessed a more quickly retracement of its preceding decline as 10 sessions decline (36317-34817) was fully retraced in just 5 sessions. A more quickly retracement in much less than half the time interval highlights positive structure
Buying on declines technique has worked nicely more than previous 15 months. Hence, any breather in the coming week would offer you incremental acquiring chance in excellent banking stocks
The index is seen forming larger higher-low in the bigger degree chart, which provides up confident to revise the assistance base larger towards Rs 35300-35500 levels as it is the confluence of the following technical observations:
– 80% retracement of the existing up move (34817-37140) placed about 35300 levels
– increasing 10 weeks EMA also placed about 35480 levels
– the worth of the increasing trend line joining the preceding lows is also placed about 35400 levels
The weekly 14 periods RSI has generated a get signal moving above its nine periods typical therefore validates positive bias
(Dharmesh Shah is the Head – Technical at ICICI Direct. Please seek advice from your economic advisor prior to 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/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 possibly have received any compensation towards merchant banking/ broking services from the topic organizations pointed out as clientele in preceding 12 months