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Nifty -A Cruicial Level 20475; If crosses decisively, 20550 to 20650 can't be ruled out;

Post Market Weekly Analysis

The Nifty 50 weekly Index opened at 19844.65 touched the high level of 20291.55 and slipped down to 19800 before closing at 20267.90. So the benchmark index oscillated in a range of 491.55 points over the previous week's trading sessions, finally closing with a gain of 473.20 points, i.e. in percentage term (2.39%) on a week-on-week basis.

Nifty 50 Index Monthly Chart

As expected, the Monthly Chart was bullish and to be closed with a huge green candle, which was anticipated well in advance. At the current level, we can see that the December month Series started in a good mood and the green candle is taking place above the previous month's high. All the simple moving averages are in supporting mode. It is too early to say anything because the new series has just begun.

Nifty 50 Index Weekly Chart

It was expected that the weekly Morubozo candle could break the lifetime high and it did and created a new lifetime high in the Nifty 50 Index. Going forward, we should be a bit cautious because the market is heading towards 19500, the round figure, and it can pause before that. We are expecting the market to be retraced from the range of 20455 to 20475. The coming week can be event-driven, so volatility could be high. We can also see 20650 on the higher side.

Nifty 50 Index Daily Chart

Now the market has an open sky and it has no resistance above this level. So it is in uncharted territory now. But as we know the market can not travel, in a straight direction. The healthy market always takes retracement before moving high.

After touching the low level of 18837 to reaching its all-time high level of 20291, the market has not seen any meaningful retracement, and we are expecting it in future trading sessions.

Nifty 50 Weekly Fibonacci Chart Status

If we use the Fibonacci extension, we can see if the market is in a bullish mood, it can touch the next level 20687, which is the 1.272 level, but if we use the channel pattern, we can see that 20500, is going to act as a resistance and a small retracement can take place from this level.

Well for sure, it would be not a very big retracement, because there are a lot of buyers, who feel FOMO and are looking to buy stocks at lower levels.

Nifty 50 Index Weekly Chart -with Technical Indicators

RSI Indicator Pattern

The weekly RSI is 65.83; it has marked a fresh 14-period high which is bullish. It stays neutral and does not show any divergence against the price.

MoneyFlow Indicator

This weekly indicator is at 68.28, which indicates the market has more potential to catch the highest mark of 80.00 or more.

MACD Indicator Pattern

The weekly MACD is bearish and below its signal line; however, it looks on the verge of a positive crossover.

FII's Cash Weekly Activities

As we suggested in our previous technical journals, FIIs had a lot of short positions and when they covered their shorts, the market became bullish. The shorts were reduced from -129K to -47.2K only. and the FIIs become buyers in Indian equities now.

The FII flow turned positive in November after sharp outflows marking the previous three months. The last five days recorded healthy buying with the fall in the US 10-year treasury yields and the US dollar index indicating the possibility of an end to the rate hike cycle.

Now the possibility of a Fed funds rate cut in the first quarter of 2024, given the consistently declining inflation and slowing job market, along with signs of cooling momentum in the US economy.

FIIs have net bought Rs 10593 crore worth of shares in the cash segment in the passing week, and their net buying for November stood at Rs 5795 crore, while domestic institutional investors have seen net purchases of Rs 4354 crore during the week, and Rs 12762 crore for November.

Going forward, FPI response will be crucially determined by the market trend which, in turn, will be influenced by the state election results. If the results turn out to be favorable for the ruling dispensation, the market will stage a rally.

The US 10-year treasury yields settled at 4.2 percent on Friday, declining from 4.47 percent in the previous week, while the US dollar index remained flat at 103.19 levels on a week-on-week basis on a week-on-week basis

FII's Cash Monthly Activities

The November month series ended on a positive note and this was the indication that the December month series can go ahead with a bullish tone.

the first day of December month starts with green and we hope that it will maintain its positivity for the whole month.

Outlook for the NIFTY 50 Index for the Coming Week

On Monday, the market will first react to the outcome of the Assembly elections in four states of Madhya Pradesh, Chhattisgarh, Rajasthan, and Telangana, scheduled on December 3, and that of Mizoram which will be out on December 4.

Investors remain optimistic about government spending and heightened consumption, driven by easing inflation, propelling growth in H2FY24. The eagerly awaited exit polls also contributed positively, boosting investor sentiments towards the current Union government.

RBI Policy

All eyes will be on the last Monetary Policy Committee (MPC) meeting outcome of this calendar year, scheduled on December 8. A status quo on the policy rates is likely to be maintained, given the consistent easing in inflation, but the commentary on any supply shocks, growth outlook, and any hint about rate cuts in the coming year will be watched.

The RBI may raise its annual growth forecast modestly but is likely to keep its inflation forecasts unchanged, citing uncertainty around the near-term outlook due to possible changes in domestic food and international energy prices.

Domestic Economic Data

After a consistent expansion in manufacturing activity, the Street will now focus on the services activity next week. S&P Global Services PMI and Composite PMI for November will be released on December 5 which, too, is likely to expand further. In October, the Services PMI stood at 58.4.

Foreign exchange reserves for the week ended December 1st will also be released next week on December 8th.

US Unemployment Rate

Investors around the world will focus on the US unemployment rate and non-farm payrolls for November, job openings and quits for October, and jobless claims scheduled to be released next week.

Most economists feel the unemployment rate is expected to stay at 3.9 percent for November. In October, the US non-farm payrolls increased by 1.5 lakh, which was below the market expectations of 1.8 lakh, while jobless claims have been increasing with continuing claims at 19.27 lakh in the week ending November 18th, the highest in nearly two years.

Global Economic Data

The US factory orders and wholesale inventories for October, weekly crude oil inventories, and vehicle sales data for November will also be announced in the coming week.

In addition, Services and Composite PMI numbers by major economies like the US, China, Japan, and Europe will also be watched, while Japan's Q3-CY23 GDP numbers, third estimates for Europe's economic growth for Q3-CY23, and China's inflation numbers for November, too, will be in focus.

India VIX:

The previous week India VIX closed at 12.38 from 11.33 Within five trading sessions, it touched a high of 12.75 and a low level of 11.77, It lost on a closing basis by

0.0300 (-2.42%) on a week-on-week basis.

India VIX, the volatility index, has seen some spike during the week, closing above the 12 level for the first time since May this year.

The index gained 9.3 percent during the week at 12.38 levels, which if increases further then the bulls may see some uncomfort

Support Level for the Coming Week for NIFTY:

The broader support level on the technical chart could be in the range of 20080 followed by the level of 19900 levels.

Resistance Level for the Coming Week for NIFTY:

The broader resistance level on the technical chart could be 20400, followed by 20580 levels.

Crude Oil

The market participants will also keep an eye on the oil prices. The Consistent correction was another positive for the Indian equity markets with international benchmark Brent crude futures falling 3.8 percent during the last week to close below the 200-day EMA (exponential moving average - $79.31) at $78.88 a barrel amid skepticism and confusion surrounding the OPEC+ announcement of approximately 900,000 barrels a day in fresh output cuts from January. Experts retain their bearish bets for the oil prices.

Market sentiments suggest concerns about the cartel's output being sufficient for a slowing global economy, contributing to the decline in crude oil prices.

The overall demand has been weakening in Q4CY23, while supplies are becoming plentiful from non-OPEC nations. The economic data from the US signals a slowdown in coming quarters and China remains sluggish.

We remain bearish on crude oil

Technical Analysis

Technically, the market is looking strong with the Nifty 50 Index eyeing 20500 levels with support at 20000 levels given the positive vibes in the previous five weeks, but in between some consolidation can't be ruled out given the consistent upward rally.

As long as the index holds 20000 (psychological mark-19,800 low of the week), marching towards 20500 looks likely in the coming days despite intermittent consolidation.

Reading Current Option Data

The weekly options data indicated that 20400-20500 can be the resistance area for the Nifty 50 Index, with support at the 20000-20200 zone.

Call open interest: Seen at 21000 strikes, followed by 20400 and 20300 strikes, with meaningful Call writing at the 20600 strikes, then 20400 and 20500 strikes,

Put open Interest: The 20000 strike owned the maximum open interest, followed by the 19500 strikes and 20100 strikes, with Put writing at 20200 strikes, and 19500 strikes.

Summary - Overall

The NIFTY has closed above the upper Bollinger band. Even if it temporarily pulls itself back inside the band, it has laid a strong foundation for a sustainable breakout taking place.

This setup has further increased the possibilities of the NIFTY 50 Index, testing the upper edge of the rising channel.

The larger setup looks strong there are greater possibility of the markets extending their breakout.

However, over the coming week, we will also see some sector rotation taking place with money moving more into relatively defensive pockets like FMCG, Consumption, Pharma, etc., while the PSE space may continue doing well.

It is strongly recommended to chase the right group of stocks while focusing on the stocks that are enjoying greater relative strength.

An equal amount of emphasis should also be kept on protecting profits at higher levels.

Thanks for reading.

Keep Trading

Stay Invested


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 anyone to follow my thoughts. I do not have any WhatsApp Group ID or Telegram ID related to it.

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