Bank Nifty continues to outperform Nifty 50; Bank Nifty targeting 44,900, Nifty to retest lifetime high of 18,887
时间:2024-06-26 13:53:10 阅读(143)
By Dharmesh Shah
The equity benchmark recouped last week’s losses and settled the monthly expiry week on a positive note. As a result, the domestic market relatively outperformed the global peers, despite uncertainty around global economic slowdown coupled with concerns regarding US debt ceiling deal. The Nifty settled the week at 18499, up 1.6%. In the process, midcaps relatively outperformed by gaining 2.6% for the week. Sectorally, IT, pharma, metal remained at forefront while financials relatively underperformed.
Going ahead, we reiterate our constructive stance and expect the Nifty to gradually retest the lifetime highs of 18887 in the coming month. In the process, we expect the broader market to relatively outperform underpinned by 18 months consolidation breakout leading Midcap index to clock a fresh All Time High. Thus, any dip from hereon should be used to build a quality portfolio from a medium term perspective. Our positive stance is further validated by following observation:
The breakout from ongoing consolidation (18500-18,000) helped index to settle at five months high, indicating acceleration of upward momentum.During recent consolidation market breadth has significantly improved supported by across sector participation as currently 62% of the stocks are trading above 200 days SMA compared to April end reading of 48%, highlighting broader market participation.FIIs continued their buying spree in May with Rs 25,000 crore inflows despite dollar index inching up by 3%. We expect dollar index to face strong hurdle at 105 in coming weeks.Sectorally, we expect stocks from BFSI, IT, Auto ancillary, capital goods and discretionary to lead the outperformance. On stock front, in large cap we prefer Reliance industries, SBI, TCS, Maruti Suzuki, United Spirits, Titan, DLF are in focus while in midcap Coforge, L&T finance, Gabriel India, Syngene, KEC, Siyaram Silk Mills, PI Industries, IDFC First Bank remain in focus. The Midcap index logged a breakout from eighteen months consolidation and recorded fresh all time high, indicating resumption of structural up trend. In the process, small cap index is still 17% away from its All Time High. Thus, we expect broader market to relatively outperform the benchmark in coming weeks.
Nifty ChartStructurally, formation of higher high-low on the monthly chart signifies elevated buying demand that makes us confident to revise support base at 18,200 as it is 80% retracement of current up move (18,060-18,508) coincided with 20 days EMA placed at 18,198.
Bank Nifty OutlookThe Bank Nifty traded in a range with high volatility and closed the week marginally higher by 0.1% at 44,018 levels amid mixed global cues. The weekly price action formed a high wave candle with a long lower shadow signalling consolidation around the 44,000 levels for the second consecutive week after the recent strong up move of 15% points in the last two months.
Going ahead, we expect the index to surpass the all-time high and gradually head towards 44,900 levels in the coming weeks being the measuring implication of the last nine sessions range (44,150-43,400). However, the up move towards 44,900 would be in a non-linear manner as bouts of volatility after last two months strong up move cannot be ruled out, dips should be used as a buying opportunity
Key observation in the weekly chart of Bank Nifty is that it has witnessed a faster retracement of the 14 week decline (44,151-38,613) during Dec ’22-Mar ’23 in just seven weeks. Faster retracement in just half the time interval indicating structural improvement from medium term perspective.
On relative terms, Bank Nifty continues to outperform the Nifty. The Bank Nifty/Nifty ratio line continues to trend higher and maintain higher high-low signalling extended period of outperformance. The index has immediate support at 43,400 levels being the confluence of the last two weeks identical lows and the 50% retracement of the recent up move (42,582-44,151). Among the oscillators, the weekly 14 periods RSI remain in uptrend thus supports the overall positive bias in the index.
(Dharmesh Shah, Head Technical, ICICI Securities. Views expressed are author’s own. Please consult your financial advisor before investing.)
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