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THE NIFTY STARTED THE SESSION WITH A POSITIVE GAP (17622-17770) AND RETRACED 80% OF PAST

The Nifty started the session with a positive gap (17622-17770) and retraced 80% of past two session’s decline. Subsequently, the index pared most of initial gains in the second half of the session. As a result, daily price action formed a bull candle with long upper shadow, indicating profit booking at higher levels ahead of Fed meet.

The lack of faster retracement on either side signifies prolonging of consolidation in the broader range of 18000-17300 amid stock specific action. We believe ongoing breather will help the index to form a higher base and eventually pave the way to head towards January 2022 high of 18300 by October. The index is undergoing healthy consolidation, which will help to cool off overbought conditions (daily and weekly stochastic oscillator cooled off to 30 and 60, respectively).Thus, ongoing breather should not be construed as negative. Instead dips should be capitalised on to accumulate quality stocks. Our positive stance on index is based on following observation.

Nifty Bank: 41468

The daily price action formed a high wave candle with a higher high -low and a bullish gap below its base (40904 -41207 ) signaling continuation of the positive momentum for the second consecutive session ahead of the FOMC rate decision on Wednesday .

Going ahead we expect the index to maintain positive bias and head higher towards 41800 levels . Dips on account of global volatility should not be construed as negative rather should be used as a buying opportunity . Index has strong support around 39800 levels .

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