THE NIFTY STARTED THE WEDNESDAY’S SESSION WITH A POSITIVE GAP 18202- 18288

The Nifty started the Wednesday’s session with a positive gap 18202- 18288. However, profit booking from higher levels dragged index towards days of 18120. The daily price action formed a bear candle carrying higher high-low, indicating temporary breather after recent sharp up move 

The sustenance above 12 months falling trend line breakout supported by multi sector participation signifies inherent strength that augurs well to reiterate our positive stance and expect the Nifty to challenge the alltime high of 18600 in coming couple of weeks. Thus, any dip from hereon owing to global volatility should not be construed as negative instead capitalise it as an incremental buying opportunity. Our positive stance on the market is further validated by following observations: a) Over the past two decades, Q4 returns for the Nifty have been positive (average 11% and minimum 5%) on 15 out of 21 occasions (70%). History favours buying dips b) India VIX, which gauges market volatility, has recorded five month’s range breakdown and is trading below 16, indicating low risk perception among market participants c) Indian equities continued to relatively outperform their global peers, showing inherent strength d) US indices oversold: Percentage of stocks above 200-dma for S&P500 and Nasdaq has approached bearish extreme of 15 and 12. Over two decades, readings below 15 and 12 have led to meaningful durable bottoms. We therefore expect US indices to pose technical pull backs from oversold readings e) US Dollar/INR pair retreated from upper band of long term rising trend line placed at 83.30 while Dollar index has faced stiff resistance from decade long resistance trend line placed around 115

Nifty Bank: 41783

The daily price action formed a small bear candle as the index opened higher and formed a fresh all -time high (41948 ) . However, profit booking at higher levels saw the index gave up its gains and closed the session marginally higher . The index maintained higher high -low highlighting continuation of the positive momentum 

Going forward, we reiterate our positive stance as we expect the index to extend the current up move and head higher towards 42900 levels in the coming weeks being the 123 . 6 % external retracement of the recent breather (41840 -37386 ) . Dips on account of global volatility should not be constructed as negative instead should be used as a buying opportunity