By Dharmesh Shah
Equity benchmarks endured their winning streak over a fourth consecutive week as Nifty gained 2.5% to settle the week at 18256. The broader market relatively outperformed as Nifty midcap, small-cap indices surged ~3%, each.
b) current week’s low is placed at17879
Nifty Chart
Bank Nifty Outlook:
The Bank Nifty extended gains for third successive week ahead of start of earnings season. The PSU banking space outshined with gain of 4% as compared to private banking index inching up by 1.5% for the week. The Bank Nifty closed the week at 38370, up by 631 points or 1.65%The price action during the week resulted in a small Bull candle with small upper shadow indicating a breather or minor profit booking after massive 4100 points gain registered in just 10 trading sessions, which pushed the momentum oscillator like stochastics in overbought trajectory and warranted some temporary breather.Going forward, our structural positive stance on Bank Nifty remains intact with next target of 40000 expected in the run-up to the Union Budget 2022, which is the 80% retracement of the entire decline (41829-34018)Index has resumed its uptrend after 20% correction, as anxiety around impact of third covid wave subsided. Therefore, any breather in coming week should not be construed negative rather would offer incremental buying opportunity as we enter the Q3 earnings season. Buying the decline strategy should work well in coming earnings season as we expect Bank Nifty index to hold strong support of 37500 levels being the confluence of the following technical observations:(a) 23.6% retracement of the current up move (34018-38851)(b) the recent breakout area is placed around 37500 levels
(Dharmesh Shah is the Head Technical Analysis at ICICI Securities. Views expressed are the author’s own. Please consult your financial advisor before investing.)
Disclaimer: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 14/01/2022 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.