By Dharmesh Shah
Equity benchmarks edged final week increased amid unstable world cues. The Nifty ended the week at 15752, up 0.3%. The broader market carried out in tandem with the benchmark as Nifty midcap, small cap gained 0.5% and 1%, respectively over the week. Sectorally, FMCG, steel, IT, realty prolonged pullback whereas financials comparatively underperformed through the week
Nifty Technical Outlook
The index remained unstable throughout month-to-month expiry week. After the preliminary blip, Friday’s 300 factors sturdy restoration from the 15500 zone helped index to recoup intra-week losses. As a consequence, day by day value motion fashioned a hammer like candle carrying a small bull candle with lengthy decrease shadow round 50% retracement of final week’s up transfer, highlighting turnaround in sentiment. Consequently, our purchase on dips technique fared nicely
The formation of upper high-low on the weekly chart signifies continuance of optimistic bias. Going ahead, holding June lows of 15200 would maintain pull again choices open in the direction of 16200 in a gradual method in coming weeks as it’s confluence of:
a) 61.8% retracement of June decline (16794-15183)
b) higher band of unfavourable hole recorded on June 13 (16201-15878)
Key level to focus on is that, over previous 4 periods index retraced merely 50% of previous 5 periods up transfer. The slower tempo of retracement signifies shopping for demand rising at elevated assist base. Thus shopping for dips amid world volatility could be the prudent technique as we imagine sturdy assist for the Nifty is positioned at 15200
Going ahead, traction in Brent Crude Oil costs shall be key monitorable because it has snapped previous six month profitable streak. A decisive shut beneath 107 would lead Brent costs in the direction of 100, which might gas upward momentum in equities
Amongst sectors, Auto, Consumption, Pharma most popular whereas BFSI and IT to witness inventory particular motion
We want SBI, Infosys, ITC, Hindustan Unilever, Divis Laboratories, ABB, Maruti Suzuki, in giant caps whereas in midcaps we want Ashok Leyland, Blue Dart Express, Federal Bank, Minda Industries, MM Forgings, Dr Lal Pathlabs, Granules, Havells India, Trent, Phoenix Mills
The broader market indices mirrored the benchmark transfer through the week and prolonged breather whereby Nifty midcap, smallcap indices have been sustaining above final week’s hammer like candle. In three cases over the previous decade, intermediate correction within the Nifty Midcap, Small cap indices have been to the tune of 28% and 40%, respectively. At current, each indices have bounced after correcting 25% and 34%, respectively. Therefore, base formation from right here on would set the stage for a technical pullback in coming weeks
Bank Nifty Outlook
The Bank Nifty traded uneven and closed marginally decrease within the earlier week amid unstable world cues. The index closed the week at 33539 ranges down by 0.3%. The weekly value motion fashioned a bear candle with a protracted decrease shallow because the index opened increased however didn’t maintain at increased ranges and gave up its positive aspects. However, shopping for demand at decrease ranges across the 33000 ranges noticed the index recuperate its intraweek decline and shut on a flat be aware
Going forward, we count on the index to steadily head in the direction of 34500 ranges within the coming weeks as it’s the increased band of bearish hole space of thirteenth June 2022 and the 61.8% retracement of the decline of June 2022 (36083-32290). Hence use dips in the direction of 32600-33000 ranges being the 80% retracement of the current up transfer (32291-34147) as an incremental shopping for alternative
In a smaller time-frame the index has already taken 5 periods to retrace simply 61.8% of its previous six periods up transfer (32291-34147). A shallow retracement indicators the next base formation
The index has key speedy assist round 32100 ranges as it’s the virtually equivalent lows March and June 2022 positioned round 32155 ranges
Amongst momentum oscillators, weekly RSI has fashioned a optimistic divergence with June low studying of 38 towards May 2022 studying of 37 whereas value made new low. Such divergence is indicating receding downward momentum and prone to set off additional technical pullback in coming weeks
(Dharmesh Shah is the Head – Technical at ICICI Direct. Please seek the advice of your monetary advisor earlier than investing.)
ICICI Securities Limited is a SEBI registered Research Analyst having registration no. INH000000990. It is confirmed that the Research Analyst or his relations or I-Sec don’t have precise/helpful possession of 1% or extra securities of the topic firm, on the finish of 17/06/2022 or don’t have any different monetary curiosity and don’t have any materials battle of curiosity. I-Sec or its associates may need obtained any compensation in the direction of service provider banking/ broking providers from the topic firms talked about as shoppers in previous 12 months.
Source: www.financialexpress.com”