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

By Dharmesh Shah

Equity benchmarks endured their winning streak over the fourth consecutive week buoyed by easing lockdown restrictions in the country. Nifty concluded the week at 15799, up 0.8%. Broader market relatively outperformed as Nifty midcap and small cap gained ~3%, each. Sectorally, IT, pharma, PSU outperformed while financials took a breather

We believe, move toward 16100 would be in a zig-zag manner

– In line with our view, broader market indices relatively outperformed the benchmark and scaled to fresh all time high. The outperformance has been backed by improving market breadth as currently average 92% index components are trading above their 50 days EMA compared to May reading of 85%, indicating inherent strength that augurs well for durability of ongoing up move-Structurally, the formation of higher high-low highlights elevated buying demand that makes us confident to revise support base at 15400 as it is confluence of:a. As per change of polarity concept, earlier resistance of 15400 would now act as a key supportb. 61.8% retracement of past three week’s rally (15145-15835), at 15409c. Last week’s low is placed at 15374

Bank Nifty outlook

The index snapped a three weeks up move and closed lower by 0.6% on weekly basis amid profit booking after a sharp up move of more than 11% in just three weeks. The weekly price action formed a small bear candle with a lower shadow highlighting a breather after recent sharp up move.

– Going ahead, we believe the current breather should be used as an buying opportunity for up move towards our target of 36200 in the month of June 2021 as it is the confluence of the 80% retracement of the entire last three months corrective decline (37708-30405) and the price parity with previous up move (30405-34287) as projected from the recent trough of 32115 signalling upside towards 36200 levels– In a smaller time frame the index has witnessed a shallow retracement as it has already taken eight sessions to retrace just 38.2% of its preceding eight sessions up move (33274-35714). A shallow retracement highlights a robust price structure and a higher base formation

We do not foresee the index breaching the crucial support area of 34400-34000

– We do not foresee the index breaching the crucial support area of 34400-34000 as it is confluence of the following technical observations:a. The 38.2% retracement of the current up move (32115-35810) placed at 34400b. The value of the rising demand line joining lows of April 2021 and May 2021 is placed around 34400c. The recent breakout area and the April high (34287).d. The rising 50 days EMA placed at 34005 levels

(Dharmesh Shah is the Head – Technical at ICICI Direct. Please consult your financial advisor before investing.)

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 22/04/2021 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