By Dharmesh Shah
In the week gone by equity benchmarks totally recouped last week’s losses and ended the week on a positive note at 15175, up 3.4%. Broader markets regained momentum and outperformed the benchmark by gaining 4%, every. Sectorally, barring FMCG, all other indices ended in green led by financials, auto and realty.
Nifty technical outlook
– The index began the week on a positive note and progressively reclaimed 15000 mark immediately after two months consolidation (14900-14400) breakout, highlighting structural improvement. The weekly value action formed a sturdy bull candle carrying greater higher-low, indicating resumption of principal up trend.
– In line with our view (discussed in the ‘Monthly Technical’ report) of Nifty heading towards 15400 in the month of May, index resolved out of previous two months consolidation (14900-14400) and now anticipated to challenge the life highs of 15400 in the coming expiry week.
– The elongated up moves followed by shallow value correction highlights robust value structure that tends to make us confident to revise our target to 15700 for the month of June 2021, as it is 123.6% external retracement of Feb-April Correction (15432-14151). Therefore, any cool off from hereon need to be capitalised as incremental getting chance in high quality significant cap and mid-caps.
– Sectorally, BFSI, Auto, and Consumption are anticipated to outperform though Infra space offers favourable threat/reward setup
– On the stock front, HDFC, IndusInd Bank, SBI, Reliance Industries Ltd, Mahindra & Mahindra, Titan Company are preferred significant caps though Ashok Leyland, Kalyani Steel, Vguard, Ambika Cotton, PNC infra, Action Constructions, EIH, Trent & Hikal are preferred inside midcap space
– Broader industry somewhat outperformed the benchmark wherein Nifty midcap and compact cap indices recorded a fresh 52 weeks higher. The broader industry outperformance highlights inherent strength of the industry that augurs effectively for durability of the ongoing up trend. We anticipate, broader industry to accelerate their relative outperformance wherein catch up activity would be seen in compact cap index, as Nifty midcap index is hovering about all time higher whereas compact cap index is nonetheless 5% away from life highs
– Structurally, the formation of greater higher-low on the weekly chart signifies elevated getting demand that tends to make us confident to revise assistance base at 14600 as it is confluence of:
a) 61.8% retracement of previous right here weeks up move (14151-15175), at 14700
b) Past two week’s low placed at 14592
Bank Nifty outlook
– The weekly value action formed a sturdy bull candle with a greater higher-low as on anticipated lines getting demand emerged about the 32000 levels being the 61.8% retracement of its April 2021 up move (30405-34287)
– Key observation is that the index has registered a breakout above a falling provide line joining important highs of the last 3 months indicating resumption of the up move.
– We anticipate the index to sustain positive bias and head towards 36200 levels in the coming month as it is the confluence of the 80% retracement of the complete last 3 months corrective decline (37708-30405) and the value parity with earlier up move (30405-34287) as projected from the current trough of 32115 signalling upside towards 36200 levels
– Index in the smaller sized time frame has witnessed a quicker retracement of the last falling segment as 11 session’s decline (34287-32115) was fully retraced in just 5 sessions. A quicker retracement in significantly less than half the time interval signals a robust value structure
– The formation of greater higher-low on the weekly chart signifies elevated getting demand that tends to make us assured to revise the assistance base greater towards 33000 levels as it is confluence of
a. The 61.8% retracement of the present up move (32115-34694)
b. The increasing 50 days EMA is also placed at 33130 levels
– Among the oscillators, the weekly stochastic stay in uptrend and is presently placed at a reading of 70 therefore supports the continuation of the positive bias in the index in the coming weeks
(Dharmesh Shah is the Head – Technical at ICICI Direct. Please seek the advice of your monetary 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/useful ownership of 1% or more securities of the topic enterprise, 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 businesses pointed out as consumers in preceding 12 months