Nifty Outlook for 5 July 2023

Nifty started the day with another gap up in Tuesday’s session and surpassed 19400 mark. However, unlike last few sessions, we witnessed some intraday volatility in the indices and the index gave up some of the gains from the highs. However, the intraday dip witnessed buying interest around 19300 and it ended the day tad below 19400 with gains of one-third of a percent.

Nifty Today:

The upmove continues in the indices with the Nifty hitting another record above 19400 and the Bank Nifty index surpassed 45500 mark during the day. However, we witnessed some cool-off in the broader markets today as profit booking was seen in some of the midcap names. Now although there’s no trend reversal yet, the sharp run up in the indices in last few sessions has led to overbought set ups of RSI readings. Now at all-time highs, reciprocal retracements usually provides important hurdles and 127% retracement of the previous correction for Nifty is around 19440 and for Bank Nifty is around 45670. Based on the retracement levels, we had projected these targets for the index and we are trading around these levels now. So some pullback is possible in the near term from the resistance which would cool-off the overbought set ups before gearing for the next leg of the rally towards higher retracement levels. However, since the broader trend is very strong, some sector rotation is possible. If the high beta names takes some back seat for the time being, then defensives such as selective IT, FMCG and Pharma may witness positive momentum. Hence, traders are advised to stay with the trend, but identify the sector/stocks where buying interest is seen and focus on trading in such names.

                                                                Nifty continues to hit record highs, sector rotations seen

The Bank Nifty index has formed a ‘Doji’ candlestick pattern around the retracement resistance zone. Hence, Tuesday’s low of 45000 will be seen as important support in the coming session which if breached, then it could result in some pullback move within this ongoing uptrend.

Nifty, Bank Nifty Levels and FINNIFTY Levels:

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