By Dharmesh Shah
Equity benchmarks prolonged beneficial properties over the third consecutive week amid decline in crude oil and industrial commodities tapering down inflation fear. The NSE Nifty 50 ended the risky week at 16221, up 3%. Broader markets carried out in tandem with the benchmark as Nifty midcap, small cap rose over 3%, every. Sectorally, all main indices led to inexperienced led by financials, consumption, realty.
Nifty Technical Outlook
In line with our view, NSE Nifty 50 resolved increased and surpassed our intermediate goal of 16200 on the backdrop of sharp decline in crude oil costs and India VIX that supported bullish sentiment. The index began the week on a constructive be aware and endured its upward momentum in the course of the week, regardless of international volatility. As a consequence, weekly value motion fashioned a bull candle carrying increased high-low, indicating continuance of constructive momentum.
Going forward, we reiterate our constructive stance and anticipate the Nifty to progressively head in direction of 200 DMA positioned at 16600 in coming weeks. In the method, intraweek dips in direction of 15800-15900 needs to be used as an incremental shopping for alternative as we imagine robust assist for the Nifty is positioned at July low of 15500. Our constructive stance on the Nifty is predicated on following remark:
a) The index has logged a resolute breakout from downward sloping pattern line (drawn adjoining April-June highs), indicating conclusion of two months’ corrective section
b) Current pull again is qualitatively higher as in contrast with earlier pull backs since April by way of market breadth (measured by proportion of shares above 50 DMA (51%) strongest in two months indicating broad primarily based participation)
c) our goal of 16600 is predicated on 50% retracement of CY22 decline (18350-15183) coincided with 200 days EMA
Amongst sectors, BFSI, IT, Auto, Consumption and capital items are most popular whereas Pharma to witness inventory particular motion
We want SBI, HDFC financial institution, Infosys, Tata Motors, DLF, L&T, Titan in giant caps whereas in midcaps we want ABB, SKF, Persistent, Apollo Tyres, M&M Finance, Bajaj Electricals, Phoenix Mills, CCL Products, Indian Hotels, Kansai Nerolac
The broader market indices mirrored benchmark transfer and fashioned the next high-low over second consecutive week signifying shopping for demand at elevated assist base. Both Nifty midcap, small cap indices are regaining upward momentum after witnessing slower tempo of retracement of mid- June up transfer. We anticipate the broader market to endure their pullback from the oversold zone in coming weeks. Thus, dips needs to be capitaslied to build up high quality shares.
Bank Nifty Outlook
The Bank Nifty witnessed robust up transfer throughout earlier week to shut at 35124 ranges up by 4.6% on weekly foundation. The up transfer was broad primarily based as each PSU and personal banking shares closed with wholesome beneficial properties. The weekly value motion fashioned a powerful bull candle with the next high-low signaling continuation of the up transfer. The index within the course of has generated a breakout above the falling provide line becoming a member of the highs of April 2022 and June 2022 indicating finish of the final three-month corrective section
Going forward, we anticipate the index to take care of constructive bias and progressively head in direction of 36000 ranges within the coming weeks as it’s the confluence of:
a) the excessive of June 2022 is positioned at 36083 ranges
b) 61.8% retracement of the final 3 months’ decline (38765-32290) can be positioned round 36200 ranges
Key remark within the latest market correction and over the past three-week pullback is that the Bank Nifty is comparatively outperforming the Nifty. It can be highlighted within the Bank Nifty/Nifty ratio chart as it’s seen breaking above the falling provide line becoming a member of latest highs highlighting power and continuation of the present outperformance
The transfer in direction of 36000 is not going to be in a linear method as bouts of volatility owing to risky international cues can’t be dominated out. Amidst elevated volatility, we anticipate shopping for dips technique to proceed to fare effectively. Use intraweek dips in direction of 33800-34000 as an incremental shopping for alternative in high quality banking shares
The formation of upper high-low within the weekly time fame make us assured to revise the assist base increased in direction of 33500 ranges as it’s the confluence of the final week low and the 61.8% retracement of the present up transfer (32290-35262)
Among the oscillators, the weekly stochastic has not too long ago generated a purchase sign shifting above its three durations common thus helps the constructive bias within the index
(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 kinfolk or I-Sec wouldn’t have precise/helpful possession of 1% or extra securities of the topic firm, on the finish of 17/06/2022 or haven’t any different monetary curiosity and wouldn’t have any materials battle of curiosity. I-Sec or its associates might need obtained any compensation in direction of service provider banking/ broking providers from the topic corporations talked about as shoppers in previous 12 months.