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Nifty -19250 Still Watchful; 19520 invites short covering; Trend Reversal only Closing above 19584

The all previous trading session except last one on Friday, the benchmark index was hovering near 19250 levels. Nifty 50 Index gave weekly returns of 0.88 percent. Indian mid-cap and small-cap indices outperformed their large-cap peer.

India’s real GDP growth in Q1FY24 came in at 7.8 percent. In the near term, the market is expected to keep a close watch on impact of weak monsoon in August and rise in crude oil prices.

Post Market Weekly Analysis

The Nifty 50 weekly Index opened at 19298.35, touched the high level of 19458.55, and slipped down to 19223.65 before closing at 19435.30. so the benchmark index oscillated in a range of 234.90 points over the previous five trading sessions, finally closing with a net profit of 169.50 points, i.e. in percentage term (0.88%) on a weekly basis.

Nifty 50 Index Monthly Chart

The Monthly Nifty Chart has started with Green Candle. the only positive point is that, , it touched its low of 19255.70, which is a little far from the previous month's low levels of 19223.65. We need to see if the monthly candle maintains its lowest level throughout the month or not. If yes, at least it is sideways to bullish for a short span of time.

Nifty 50 Index Weekly Chart

The Nifty 50 Index Weekly Chart, reversed back on the last day of the weekly trading session from its losing spree to a bullish spree and stopped the fall of the previous 5 weeks. Is it really trustworthy for trend reversal? The volumes speak differently, it is more than the previous 12 weekly sessions. All Simple moving averages are supportive so far, which indicates a little more upside, is inevitable.

Nifty 50 Weekly Fibonacci Chart Status

The Fibonacci indicates the reversal formation has taken place from the exact point of 78.6%. It seems if it will consolidate in between the range or it can go upward again, to touch at least 19584 levels.

Nifty 50 - Index Daily Chart with Expanding Channel

The Nifty 50 Index Daily expanding channel seems ready to break its upper channel trendline in the coming week. It has already been tried previously 5 times, but the sixth time, it made it. One follow-up candle needs to confirm its eligibility.

Nifty 50 Index Daily Chart

All simple moving averages are supporting the Nifty 50 Index daily chart, so far. and it seems, it is ready to break the levels of 19500 too easily, in the coming week. But we need to watch its closing levels on a daily basis. It should not be below 19250 levels to continue its journey upward.

FII and DII Weekly Trading Activities

The Foreign institutional investors (FIIs) continued to sell in the sixth consecutive week as they offloaded equities worth Rs 4,311.58 crore, while domestic institutional investors (DIIs) bought equities worth Rs 9,570.03 crore in this week. However, in this month of August, FII sold equities worth Rs 20,620.65 crore and DII bought equities worth Rs 25,016.95 crore.

Outlook for the NIFTY 50 Index for Coming Week starts from 4th September 2023

Nifty after a gap of several days formed a long bull candle on the daily charts. On the weekly charts, a reasonable bull candle with a minor lower shadow was seen.

The formation of a bullish pattern-like inverted hammer of last week seems to have confirmed this week with a sizable upside bounce in the market. Additionally, the index has broken out of a falling channel, further indicating increasing bullish sentiment

India VIX

The previous week India VIX closed at 11.36 from 12.08 Within five trading sessions, it touched the high of 12.18, It lost on a closing basis by -5.78%, and marginally declined on a weekly basis.

Support Level for the Coming Week for NIFTY:

The broader support level on the technical chart could be in the range of 19250 followed by the level of 19000. levels.

Resistance Level for the Coming Week for NIFTY:

The broader resistance level on the technical chart could be 19600, followed by 19730, levels.

Reading Current Option Data:

The Nifty50 Index has taken a good support at 19,250-19,200 levels in last several days, which is expected to be in principle support because breaking of the same can drag it down to 19,000-18,900 levels.

Now, the Nifty 50 Index has formed bullish candlestick pattern which resembles Bullish Engulfing kind of pattern formation on the daily charts, raising hopes for further rally in coming sessions.

While on the weekly basis, the index has also formed green candle after Inverted Hammer pattern in previous week, which generally considers as a trend reversal pattern, which came true in the passing week.

Broader Expectaion:

The 19,450-19,500 area is crucial next week for further recovery and if the index surpasses and sustains above 19,650 mark in coming days then can raise confidence among participants about further positive momentum towards 19,800, but till then rangebound activity will continue.

"Nifty has managed to hold 19,200 despite multiple attempts of breakdown in the last three weeks and that may help the bulls to reclaim the lost ground ahead. However, it would be early to say that the trend has reversed until we decisively cross and sustain 19,650 levels

Immediate Expectation:

The Option data indicated that 19,500-19,600 is expected to be resistance area in coming days, with critical support at 19,300-19,200 levels.

The maximum Call open interest was seen at 19,600 strike, followed by 19,500 strike, with meaningful Call writing at same strikes in same sequence,

The maximum Put open interest was at 19,300 strike, followed by 19,400 and 19,200 strikes.

If Short covering happens at 19,500 strike in the coming days is likely to push the index even higher

Looking at the higher end of the spectrum, there is now a resistance level at 19,530 levels If the Nifty 50 Index manages to breach this resistance, it could signal a continuation of the uptrend. On the lower end, there is strong support at 19,340 levels

In the change of Bank Nifty Weekly from Thurday to Wednesday from 4th September onwards, this expiry could show some volatility For Bank Nifty traders, 44200 would be the crucial support level, and above the same it could move up till 44700 and 45000. On the flip side, below 44200, the index could slip till 43900-43700 levels.

A word of caution for all traders that the broader trend of the Nifty Index is still downward but the index is taking strong support from the lower levels helps falling speed get a break as of now.

Hence, from the short-term trading perspective, traders will likely make profits if they keep the directional bias sideways. That simply means going long near the support and short near the resistance. This strategy has been working brilliantly for the last many sessions and as of now, this tussle between bulls and bears continues.

"We expect the market to trade in a range with sector- and stock-specific actions as the broader market momentum remains positive.

Further, in the absence of any major triggers from the domestic market, the sentiments would be driven by global cues, including the release of US payroll and PMI data.

It is recommended to continue staying highly stock-specific in nature and selective in approach while maintaining a cautious approach for the coming week.

Thanks for reading. Keep Trading Stay Invested

Regards, Neeraj Bhatia (Managing Director) Disclaimer: I am a National Stock Exchange certified Technical Analyst and Chartist but not a SEBI Registered Analyst, so consult your financial advisor, before taking any trade. This technical weekly post-market journal is only for learning purposes and it is downloadable free of cost. The views written here are entirely only my personal views. I am not forcing here anyone to follow my views. I do not have any WhatsApp Group ID or Telegram ID related to it.

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