Nifty set to hit 16,100 in coming weeks, Bank Nifty may head to 36,200; Maruti, Axis Bank, Tata Steel in focus

By Dharmesh Shah

The broader market indices outperformed the benchmark last week by gaining over 1.2%, each and scaled to fresh all-time high while equity benchmarks hovered within a whisker of all-time highs as lacklustre movement prevailed over a second consecutive week. The index settled on a flat note as Nifty eased 0.2% to end the week at 15690. Sectorally, financials, metal, realty outperformed whereas losses in auto, IT, pharma capped gains

Bank Nifty Outlook

– The Index started the week on a positive note but profit booking at the higher band of the last five weeks range (35800-34000) saw the index gave up most of its weekly gains and closed marginally higher by 0.8%. The weekly price action resulted in a small bull candle with a long upper shadow while maintaining higher high-lows indicating extended consolidation– Going ahead, we maintain our positive stance; however, a couple of weeks’ breather cannot be ruled out. We advise to capitalize such breather as an incremental buying opportunity for up move towards 36200 levels in the coming weeks as it is the 80% retracement of the February – April 2021 decline (37708-30405)– On a smaller period the index has witnessed a shallow retracement as it has retraced just 50% of its May rally (32115-35810) over past five weeks.

– Key observation is price action has been contracting over past few sessions suggesting that breakout from this consolidation is approaching. We expect index to breakout on the higher side given shallow retracement and robust price structure– The formation of higher high-low in the weekly time frame gives us confident to revise the support base higher towards 34200-34500 being the confluence of the following technical observations:a. The 80% retracement of the recent up move (33908-35811) placed at 34290 levelsb. The value of the rising demand line joining major lows since May 2020 is placed around 34550c. The rising 50 days EMA is also placed at 34580 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