As we stated in our previous week's technical journal the market can go for a retracement, before moving up. And it did the same, continue decreasing India VIX and the FII's relentless selling is the main reason behind it.
The Nifty 50 Index moved in the range of 309 points only, and this trading range remained in line with expectations.
After consolidating the major part of the week and coming off from its high point, the benchmark index NIifty ended with a net loss of 203.95 points, which is approximately -1.14% negative on a weekly basis.
Let us discuss, what Techincal Charts are indicating for next week's market behavior.
Nifty 50 Index Monthly Chart
The Nifty 50 Index Monthly chart, indicates that after three3 Red Crow candles and one Doji (indecisive) monthly candle, as we expected, the Nifty 50 Index monthly candle seems to be closed in Green this month. In the previous week, Nifty tried to cross the high of the doji candle formation in March 2023 month, which was at 17799.95, but again failed to sustain after touching its high of 17863.
We have now only last week's session left in April Expiry, where we could expect the benchmark index to cross the previous month's high, to sustain in the coming months, or else it can drift down further because expectations from corporate results are not in line.
From a moving averages point of view, the Nifty 50 Index Monthly chart is sailing smoothly, because all the candle formations are above 50, 100, and 200 DMA's.
Nifty 50 Index Weekly Chart
As we mentioned in our previous technical journal we suggested that for confirmation of break out we need a follow-up candle, to be closed above the previous candle, but as expected and early retracement formed the new big red candle, which is actually bearish engulfing in nature, which shows a negative sentiment for coming week.
As per technical theory sometimes the retracement from near the top could be a sign of a bullish signal. It may be possible, that after three weeks of continuing green candles, forced traders to book their profit in the previous week, so they can once again try to buy on dips with their fresh capital.,
We can still see one more bullish bout upward of 18000, but this completely depends on corporate results. The result of Reliance Industries and ICICI Bank beats the expectation of the market, so we should wait to see the sentimental expectation in Monday's trading session.
All the candles are smoothly sailing above all the weekly moving averages, so we can not see any big downward trend expectation immediate basis, because the coming week's expiry is monthly expiry and this week would be a volatile week.
Nifty 50 Index Daily Chart
On the Nifty -50 index Daily Chart, we can see that the previous week as soon as daily candles touched the 100 DMA, they got a rejection from there, and all 5 daily candles closed in the red.
Currently, it took support from 200 DMA, where we can see the rejection from the downside on the Friday candle, which is our hope for the coming week, that candles are respecting 200 DMA and the downside is limited for this week.
As you can see that 50 DMA is exactly on 17500, so we should expect volatility we can not be ruled out that 17500 is a very strong support, where we can see a huge bounce back, if it is tested this week at the lower side.
We made this channel, long back on the daily chart, and we can see that daily candles respected the channel, and in the previous week all trading sessions, it was closed above the channel. , so there is hope, they can take support from this channel and reverse back upward. But in any case, if they entered the channel back and the candle closed on a daily closing basis, then we can see the market drifted a little more downside.
Outlook for the NIFTY 50 Index for Coming Week starts from 24th April -2023
Over the coming week, it is important to keep a very cautious and close tab on a couple of things from a technical perspective.
The India VIX. This volatility gauge has closed at a new low of 11.63 after coming off by 2.33% on a weekly basis. This has plunged to a new low nearly by violating the year 2021 low of 11.70. With this being persistently at precariously low levels,
You can have a look at India's VIX movements on a year as well as a daily basis from the below charts.
India VIX (Yearly Chart)
India VIX (Daily Chart)
As we can see that India Vix is nearly touching September 2021 Low, this has left the markets vulnerable to sharp profit-taking bouts from current and higher levels.
And we have seen that the same has been done by FIIs, multiple times.
The below data confirms the above-mentioned statement.
FIIs Activity in the Previous Week
In the future index, Fiis was continuously decreasing their positions, but from 13th April 2023 onwards, they once again started increasing their position in Index Future, Obviously, not in a big way, but on other hand, they started selling in the cash market, once again as soon as market try to stable on the upper side.
The below chart is also showing FIIs' monthly activities, where one can see that DIIs are supporting the market against FIIs relentlessly selling. And we know DIIs have either the common man's SIP money or EPFO money or LIC money, which they are investing on our behalf.
Support Level for the Coming Week for NIFTY:
As per technical charts, We can not see any change from the previous support levels. Still, we can see the border support coming from the level of 17500 and if it breaks decisively, then 17380 is the next support level to be watched.
Resistance Level for the Coming Week for NIFTY:
We can see the broader resistance level could be 17700, followed by 17865.
The technical analysis shows that 17863 the high point of the previous week, has become the short-term support zone for the coming days, and without meaningful up-move is likely unless this level is taken out.
If 17500 breaks out decisively, then only we should look at the below levels seriously. The 50-week Moving Average, which stands at 17367, and the 100-week moving average, which stands at 17187 are the strongest levels, which would become the next target levels obviously.
In summary, it is not wise to chase the index, while going up. Sell on the rise is the technique, which is followed by FIIs on every rise, which will make the Nifty index to be bearish to range bound.
And the Nifty-50 Index could be in consolidation mode, till DIIs support the market from falling down. But until what level? Seriously we need to look for?
Thanks for reading.
Disclaimer: I am not a SEBI Registered technical Analyst, so consult your financial advisor, before taking any trade. This technical post is only for learning purposes.