NIFTY WEEKLY OUTLOOK FOR 5 JUN TO 9 JUN 2023

The Nifty50 consolidated in narrow range last week, but the index outperformed Bank Nifty. Bank Nifty has been in negative divergence for more than a week, but prices have not confirmed. Nifty's chart construction is relatively better than Bank Nifty's. Nifty is trending up in an upward parallel channel and support on the downside is 18500 and 18300 while target on the upside is 18800-19000. Bank Nifty underperforms near term but held until the 43500 level will continue to trend positive for the 44500 to 44800 targets. Bank Nifty has been in negative divergence for more than a week. but the prices have not confirmed the same. On monetary policy, we expect the MPC to recommend the status quo with no change in policy rates or action to affect liquidity conditions. We believe financials could outperform ahead of monetary policy as we hope for a signal of rate cuts in the future months or quarters. That's because financials tend to outperform in the rate cut cycle. On the other hand, valuation multiples of financials have already normalized over the past year or so. We prefer stocks like M&M Financials, L&T Financial Holdings and PFC /REC as a tactical play ahead of monetary policy. Yes, there was outperformance from the broader markets, particularly the Nifty Midcap Index, which hit a lifetime high. It has provided a long-term breakout and is expected to continue to outperform the benchmark Nifty in the future. The Nifty SmallCap Index has also made a break above the 10200 level but is still well below its lifetime high so there is still plenty of support for the Nifty Midcap Index at 32800 while support for the Nifty Smallcap- index is at 32800. Yes, there was outperformance from the broader markets, particularly the Nifty Midcap Index, which hit a lifetime high. It has provided a long-term breakout and is expected to continue to outperform the benchmark Nifty in the future.