Nifty may head to 16,100 in coming weeks, Bank Nifty positive; Infosys, Axis Bank stocks top bets

Previously three weeks, wholesome consolidation (15900-15500) helped Nifty index to type a better base within the vary of 15600-15500.

By Dharmesh Shah

Within the week passed by fairness benchmarks concluded on a subdued be aware. The Nifty dropped 0.9% to settle the week at 15722. Broader markets comparatively outperformed as Nifty midcap and small cap gained 0.5% and a couple of%, respectively. Sectorally, Pharma, FMCG, PSU Financial institution outshone whereas Financials and metallic took a breather

Nifty Technical Outlook

– The fairness benchmark opened the week on the all-time excessive of 15915, nevertheless did not maintain on the higher band of consolidation (15900) and consequently underwent revenue reserving. Consequently, weekly worth motion fashioned a bear candle carrying greater high-low, indicating prolonged breather amid inventory particular motion. Within the course of, Nifty small cap index scaled to a contemporary all-time excessive, highlighting resilience
– We imagine, up to now three weeks, wholesome consolidation (15900-15500) helped index to type a better base within the vary of 15600-15500. We count on the index to step by step resolve above the higher band of consolidation and finally head in direction of 16100 in coming weeks as we method Q1FY22 earnings season. Thereby dips ought to be capitalised as incremental shopping for alternative. Our constructive bias on the benchmark is predicated on following thesis:
a) The index has witnessed a shallow retracement as over previous three weeks it retraced merely 38.2% of previous 4 weeks rally (15900-15600), indicating wholesome consolidation
b) Previous three weeks worth motion has seen contraction in worth vary (which is often adopted by a variety breakout) as over subsequent weeks index fashioned a better lows, highlighting elevated shopping for demand
c) The previous 4 session’s corrective transfer helped the index to chill off the overbought situation that consequently hauled the Nifty in direction of decrease band of rising channel positioned round 15600
– On the sectoral entrance, IT, BFSI, Auto and Pharma are sectors in focus and anticipated to steer the rally
– Our most well-liked giant caps are Infosys, Axis Bank, Tata Motors, Divis Laboratories and Titan Company whereas, in midcaps we like Mindtree, Trent, Deepak Nitrite, Philips Carbon, Caplin Level, CCL Merchandise, KSB, Dhampur Sugar, Bluedart, Pricol, Supreme Industries
– The small cap index continued to outperform the benchmark because it scaled to contemporary all-time excessive after a few weeks consolidation at multi yr breakout space. In the meantime, Midcap index prolonged wholesome consolidation which might assist index to type a better base and in the end make bigger uptrend sturdy
– Structurally, we don’t count on index to breach the important thing help threshold of 15600-15500 thereby prolonged breather ought to be capitalized to construct a high quality portfolio as key help of 15500 is confluence of:
a) 61.8% retracement of previous 4 week’s rally (15145-15916), at 15440
b) Decrease band of previous two months rising channel is positioned round 15600
c) previous three week’s low is positioned at 15450

The small cap index continued to outperform the benchmark because it scaled to contemporary all-time excessive after a few weeks consolidation

Financial institution Nifty Outlook

– The Index settled 1.5% decrease for the week after a uneven and inventory particular play. The weekly worth motion resulted in a bear candle indicating prolonged consolidation submit early June swing excessive (35810) whereas forming greater lows amid elevated shopping for demand
– Going forward, we count on the index to commerce with constructive bias and head in direction of 36200 ranges within the coming weeks as it’s the confluence of the 80% retracement of the February – April 2021 decline (37708-30405) that coincide with worth parity of late April swing (30405-34287) as projected from the current trough of 32115
– On a smaller timeframe the index has witnessed a shallow retracement because it has retraced simply 50% of its Could rally (32115-35810) over previous 4 weeks.

On a smaller timeframe the index has witnessed a shallow retracement because it has retraced simply 50% of its Could rally (32115-35810) over previous 4 weeks.

– Key commentary is worth motion has been contracting over previous few periods suggesting that breakout from this consolidation is approaching. We count on index to breakout on the upper facet given shallow retracement and sturdy worth construction
– The formation of upper high-low within the weekly timeframe offers us assured to revise the help base greater in direction of 34200 being the confluence of the next technical observations:
a. The 80% retracement of the final 5 periods up transfer (33908-35576) positioned at 34265 ranges
b. The worth of the rising demand line becoming a member of lows of April 2021 and Could 2021 is positioned round 34450
c. The rising 50 days EMA can be positioned at 34300 ranges

(Dharmesh Shah is the Head – Technical at ICICI Direct. Please seek the advice of your monetary advisor earlier than investing.)

ICICI Securities Restricted is a SEBI registered Analysis Analyst having registration no. INH000000990. It’s confirmed that the Analysis Analyst or his family members or I-Sec should not have precise/helpful possession of 1% or extra securities of the topic firm, on the finish of twenty-two/04/2021 or don’t have any different monetary curiosity and should not have any materials battle of curiosity. I-Sec or its associates may need acquired any compensation in direction of service provider banking/ broking providers from the topic corporations talked about as purchasers in previous 12 months