Index started the session on a positive note

Index started the session on a positive note. However, profit booking from overbought conditions ahead of Fed event dragged index towards last sessions low of 18060. The daily price action formed a bear candle that engulfed Tuesday’s trading range, indicating breather after recent sharp up move. In the process, stock specific action prevailed amid advancement of Q2FY23 earning season

The index has taken a breather after > 1200 points rally over past three weeks which hauled daily stochastic oscillator in overbought conditions (placed at 90). However, the broader bullish structure remains intact as index has been forming higher peak and trough on the larger degree chart that makes us confident on reiterating our constructive stance with a target of 18600 by December 2022. Thus, bouts of volatility owing to global developments should not be construed as negative. Instead, dips should be used as buying opportunity as we do not expect index to breach the key support of 17500 in coming weeks. Our positive stance is based on following observations

Nifty Bank: 41146

The index in the last six sessions is seen trading in a narrow range of 40800 -41600 signalling consolidation after the recent strong up move . The daily price action formed a small bear candle with a lower high -low as the index continues to consolidate in a narrow range ahead of the US FOMC rate decision

We believe dips on account of global volatility should not be constructed as negative instead should be used as a buying opportunity in quality banking stock . We expect index to surpass the all -time high (41840 ) in the coming sessions and extend the current up move towards 42900 levels in the coming week being the 123 . 6 % external retracement of the recent breather (41840 - 37386 ) .