By Dharmesh Shah
The Nifty started the last week on a positive note and broadly traded in 18100-17800 range throughout the week. In the process, in four out of five sessions Nifty closed above the psychological mark of 18000 despite global volatility and managed to hold a 50 days EMA.
Nifty Chart
Bank Nifty Outlook
– The Bank Nifty traded with corrective bias for the third consecutive week and closed lower by 2%. The weekly price action formed a bear candle with a small lower shadow as it rebounded taking support around the vicinity of the 50 days EMA placed around 38390 levels– Key observation is that the index since April 2020 has not corrected for more than four weeks barring one instance while 50 days EMA has acted as strong support during each of the corrective phase. In the current scenario with three weeks of decline already behind us, we expect the index to maintain the rhythm and form a higher base around 50 days EMA (currently placed around 38390)– In this truncated week, we expect the Bank Nifty index to continue with its healthy consolidation in the broad range of 38200-40000.
– We believe the current breather should not be seen as negative instead it should be capitalized to accumulate quality banking stocks for the next leg of up move. Buying on dips strategy has worked well on multiple occasions in the last 18 months.– The short term support base for the index is placed at 38400-38200 levels being the confluence of:a) 61.8% retracement of the recent up move (36876-41829)b) the upper band of the recent seven months range breakout areac) the rising 50 days EMA is also placed at 38390 levels
(Dharmesh Shah is the Head – Technical at ICICI Direct. Please consult your financial advisor before investing.)
ICICI Securities Limited is a SEBI registered Research Analyst having registration no. INH000000990. It is confirmed that the Research Analyst or his relatives or I-Sec do not have actual/beneficial ownership of 1% or more securities of the subject company, at the end of 22/04/2021 or have no other financial interest and do not have any material conflict of interest. I-Sec or its associates might have received any compensation towards merchant banking/ broking services from the subject companies mentioned as clients in preceding 12 months
