Nifty set to touch 16,100, Bank Nifty may hit 36,200 in June 2021; TCS, SBI strong on charts

The present breather in Nifty needs to be used as an shopping for alternative for up transfer in direction of our goal of 36200 within the month of June 2021

By Dharmesh Shah

Fairness benchmarks endured their profitable streak over the fourth consecutive week buoyed by easing lockdown restrictions within the nation. Nifty concluded the week at 15799, up 0.8%. Broader market comparatively outperformed as Nifty midcap and small cap gained ~3%, every. Sectorally, IT, pharma, PSU outperformed whereas financials took a breather

Nifty technical outlook

– The index continued with its report setting spree over third consecutive week as Nifty clocked a recent all time excessive of 15835. The weekly value motion fashioned a bull candle with small decrease shadow, highlighting elevated shopping for demand as intra-week dips have been purchased into. On anticipated strains, small cap index scaled to recent all time excessive supported by sooner retracement as 9 quarters decline retraced in simply 5 quarters, indicating structural enchancment
– Going forward, we count on the index to increase its northbound journey and step by step head in direction of our earmarked goal of 16100 in June 2021. Our constructive view is backed by following thesis:
a. The formation of upper excessive supported by bettering market breadth highlights sturdy value construction. At present 94% parts of Nifty 500 index are buying and selling above their 50 days EMA in comparison with Might studying of 86%, indicating broader market participation
b. Robust world cues have been offering impetus as majority of world indices proceed to exhibit power and hit lifetime highs. Home market is witnessing sturdy optimistic correlation with its world friends
– We imagine, transfer towards 16100 can be in a zig-zag method as bouts of volatility owing to overbought situation of weekly stochastic oscillator (at the moment positioned at 97) can’t be dominated out. Subsequently, any dip from right here on needs to be capitalised on as incremental shopping for alternative in high quality giant cap and midcaps as we imagine sturdy help for the Nifty is positioned at 15400. Our earmarked goal of 16100 is predicated on:
a. Worth parity of publish funds rally (13597-15432), projected from April low of 14151, at 16055
b. Previous two months consolidation (15140-14150) breakout goal at 16120
– Sectorally, IT, Infra and Consumption are anticipated to guide whereas BFSI and Auto gives beneficial risk-reward setup
– On the inventory entrance, we stay constructive on TCS, Tata Motors, SBI, Ashok Leyland, SAIL, Titan Company, Cipla whereas, in midcaps we like DCB Bank, Glenmark Pharma, Mindtree, Mind Design, Mahindra Logistics, Godrej Properties, Greaves Cotton, SKF India

We imagine, transfer towards 16100 can be in a zig-zag method

– In step with our view, broader market indices comparatively outperformed the benchmark and scaled to recent all time excessive. The outperformance has been backed by bettering market breadth as at the moment common 92% index parts are buying and selling above their 50 days EMA in comparison with Might studying of 85%, indicating inherent power that augurs nicely for sturdiness of ongoing up transfer
-Structurally, the formation of upper high-low highlights elevated shopping for demand that makes us assured to revise help base at 15400 as it’s confluence of:
a. As per change of polarity idea, earlier resistance of 15400 would now act as a key help
b. 61.8% retracement of previous three week’s rally (15145-15835), at 15409
c. Final week’s low is positioned at 15374

Financial institution Nifty outlook

The index snapped a 3 weeks up transfer and closed decrease by 0.6% on weekly foundation amid revenue reserving after a pointy up transfer of greater than 11% in simply three weeks. The weekly value motion fashioned a small bear candle with a decrease shadow highlighting a breather after latest sharp up transfer.

– Going forward, we imagine the present breather needs to be used as an shopping for alternative for up transfer in direction of our goal of 36200 within the month of June 2021 as it’s the confluence of the 80% retracement of your entire final three months corrective decline (37708-30405) and the worth parity with earlier up transfer (30405-34287) as projected from the latest trough of 32115 signalling upside in direction of 36200 ranges
– In a smaller timeframe the index has witnessed a shallow retracement because it has already taken eight classes to retrace simply 38.2% of its previous eight classes up transfer (33274-35714). A shallow retracement highlights a sturdy value construction and the next base formation

We don’t foresee the index breaching the essential help space of 34400-34000

– We don’t foresee the index breaching the essential help space of 34400-34000 as it’s confluence of the next technical observations:
a. The 38.2% retracement of the present up transfer (32115-35810) positioned at 34400
b. The worth of the rising demand line becoming a member of lows of April 2021 and Might 2021 is positioned round 34400
c. The latest breakout space and the April excessive (34287).
d. The rising 50 days EMA positioned at 34005 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 would not have precise/helpful possession of 1% or extra securities of the topic firm, on the finish of twenty-two/04/2021 or haven’t any different monetary curiosity and would not have any materials battle of curiosity. I-Sec or its associates may need obtained any compensation in direction of service provider banking/ broking companies from the topic corporations talked about as shoppers in previous 12 months