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Nifty - ATH again & the momentum continues; FPI turns buyers; Wide Range 22200 to 22800 Consolidation Likely

In the coming week, overall, the positive momentum is likely to be sustained, and hence, a buy-on-dip is advisable despite possible intermittent some consolidation and minor profit booking, with a focus on US & India inflation numbers, and oil prices.

There are three main reasons, forced FPIs to turn into buyers in Indian equities:

  1. The FPI strategy of selling equity in emerging markets to buy US bonds has stopped.

  2. US bond yields have been steadily declining (the 10-year yield has declined from above 4.3 percent to 4.08 percent now) and this has halted the switch from equity to bonds.

  3. the Indian market is showing great resilience and every dip is getting bought. FPIs have been forced to buy the same shares that they sold at higher prices, which is a losing game

Post Market Weekly Analysis

The Nifty 50 weekly Index opened at 22403.50 touched the high level of 22525.65 and slipped down to 22224.35 before closing at 22493.55. So the benchmark index oscillated in a range of 301.30 points over the previous week's trading sessions, finally closing with a gain of 115.15 points, i.e. in percentage term (+0.51%) on a week-on-week basis.

Nifty 50 Index Monthly Chart

In the monthly chart, the market is showing strong buying interest and closes with a strong marubuzo candle, which is formed after two previous months of the dozi candle. It is too early to say anything but till the market is above the level of 22000 to 22300 range, it is still in the bullish phase.

Nifty 50 Index Weekly Chart

In a weekly chart, the Nifty 50 Index is bullish from last six weeks. If the Nifty 50 Index is above the level of 22224 on closing basis, it is still in bullish phase, but below that it needs to take support at 22000, which is a immediate strong support level.

Nifty 50 Index Daily Chart

After a strong run-up, now the index is taking pause, because in the previous week trading sessions, we have seen the three profit booking sessions out of five trading sessions. Below the level of 22430 on closing basis, Nifty 50 Index can drift further up to 22225 levels, nd below this it will become weak.

Nifty 50 Weekly Fibonacci Chart Status

After a new life time high, index is taking pause and profit booking is going on. The next level could be 22600, which is 1.414 level of fibonacci chart, On the worst side, it can plunge to 0.5 level, whcih is 22376 leel, in case of profit booking.

Nifty 50 Index Weekly Chart -with Technical Indicators

RSI Indicator Pattern

The weekly RSI is 74.83; it remains in the mildly overbought zone but also stays neutral showing no divergence against the price

MoneyFlow Indicator

This weekly indicator is at 84.89 which is in its overbought zone. And it seems that it is looking for profit-taking bouts in the market from this level or a little higher levels.

MACD Indicator Pattern

The weekly MACD stays positive and remains above its signal line. However, the narrowing Histogram hints at a likely negative crossover over the coming days.

FII's & DIIs Cash Weekly and Monthly Activities

Apart from these above data points, the renewed buying interest from foreign institutional investors in the equity markets will be key to watch, though the Indian equities seem to be less dependent on the FII inflow given the rising and consistent DIIs inflow.

FIIs have net bought Rs 10,081 crore in the cash segment in the truncated week ended March 7, especially after the falling US bond yields, and better-than-expected growth in the Indian economy in Q3FY24 (and better than other larger economies), while domestic institutional investors have purchased more than FIIs, at Rs 10,129 crore worth of shares for the week.

The US 10-year treasury yields fell to 4.08 percent from 4.18 percent on a week-on-week basis, while the US dollar index dropped to 102.74, from 103.86 levels during the same period.

Outlook for the NIFTY 50 Index for the Coming Week

In the coming week, overall, the positive momentum is likely to ,be sustained and hence buy-on-dips is advisable, though given the one-way rally in the last four weeks, some consolidation and minor profit booking can't be ruled out

Bulls continued to back the market for the fourth consecutive week ended March 7 and the buying interest was observed at lower levels that very week, which ultimately resulted in the benchmark indices reaching a new high.

Positive economic conditions, an increase in FII flow amid a fall in US bond yields, and rising hopes for a fed funds rate cut by June after recent US economic data supported the market sentiment.

India VIX:

The previous week India VIX closed at 13.61 it touched a high of 15.30 and a low level of 13.56, It lost on a closing basis by -1.3800 (-9.20%) on a week-on-week basis.

Support Level for the Coming Week for NIFTY:

The broader support level on the technical chart could be 22224, followed by 22000 levels.

Resistance Level for the Coming Week for NIFTY:

The broader resistance level on the technical chart could be the level of 22525, followed by 22800-23000 levels.

Crude Oil

Meanwhile, the Brent crude futures, the international benchmark for oil prices, remained volatile and ranged at around $80-84 a barrel for a month now. It struggled a lot to hold above $84 a barrel many times since February but failed to sustain the same on a closing basis, which continued to be supportive for India, the net oil importer. Experts largely expect the consolidation to continue in the coming week, too, amid concerns of a possible economic slowdown in the US and demand worries in China.

Brent crude futures closed at $82.08 a barrel, down 1.76 percent for the week with higher volumes.

Important Upcoming Weekly Activities

US Inflation

Globally, the market participants across asset classes will keep an eye on the US inflation numbers for February scheduled on March 12. Most experts feel the CPI inflation is likely to be around similar levels of January (3.1 percent) and there may be a moderate dip in core inflation from 3.9 percent in January, which is the most important data for the Federal Reserve before its next policy meeting scheduled on March 19-20.

The recent weak US economic data including downward revisions in jobs growth for December & January, and increasing unemployment rate which all indicate softening in the US labor market, along with falling US bond yields may be hinting that the rate cut is possibly before June instead of later this calendar year.

Global Economic Data

Further, participants will also focus on US PPI (producer price index) and retail sales data for February along with Japan's GDP numbers for the October-December quarter of 2023, and China's vehicle sales for February, next week.

CPI Inflation

Coming back to India, the key factor to watch out for would be the same, i.e. CPI inflation for February scheduled on March 12. The inflation for February is likely to be above the January level which was 5.1 percent, which may be due to increasing food and core prices, while core inflation, too, is also expected to be slightly above 3.5 percent, the level seen in January.

This is an important data point ahead of the next RBI policy meeting scheduled for April 3-5, 2024.

A forecast turn correct of CPI inflation rose slightly, to 5.3 percent, in February, with a modest sequential rise in food and core prices. Price pressures largely remain in check, and food prices are coming off gradually.

This should keep the RBI on the sidelines for longer, with no urgency to cut rates given robust growth.

Domestic Economic Data

Further, industrial & manufacturing production numbers for January will also be released on the same date, while WPI inflation for February (against 0.27 percent in January) will be announced on March 14.

Passenger vehicle sales data for February will be released on March 11, while the balance of trade numbers for February, and foreign exchange reserves for the week ended March 8 will be announced on March 15.

Technical Analysis

Technically, the Nifty 50 is looking strong with higher high formation and positive bias in momentum indicators, along with the index sustaining above all key moving averages. Hence, the index is likely to climb to 22,600-22,700 levels in the coming days, with support at 22,200.

Nifty decisively climbed back above the upward-sloping resistance trendline after a breakout and also defended the 10-day EMA (exponential moving average). It is likely to face resistance at 22,600-22,700 in the coming sessions, with support at 22,200-22,100.

Reading Current Option Data

The options data indicated that 22,500 is expected to play a crucial role in the market direction going forward, with a hurdle on the higher side seen at 22,700 and support at 22,400 and 22,000 zones.

On the Call side, the maximum open interest was seen at 22,500 strikes, followed by 23,000 and 22,700 strikes, with writing at 22,500 strikes, then 22,900 & 22,700 strikes

On the Put front, the 22,500 strikes owned the maximum open interest, followed by 22,400 & 22,000 strikes, with writing at 22,500 strikes, then 22,400 strike.

The cooling down volatility substantially boosted the confidence among bulls.

Falling the volatility further may give more comfort for bulls, but rising again towards the 16 mark may bring some consolidation and correction in the market, experts said. India VIX, the fear gauge, fell 9.2 percent during the week to 13.61 level


Participant Wise Final F&O Weekly Summary

FII's, PRO, and Clients F&O Summary by Segment

1). FII's positions as of the last trading day:

2). PRO's positions as of the last trading day:

3). CLIENT's position as of the last trading day:

Summary - Overall

A long bull candle was formed on the daily chart with long lower shadow. Technically, this pattern indicates bullish rising three method pattern and this is an uptrend continuation pattern.

All in all, we are likely to see the markets inching higher, however, on week-on-

week terms, any runaway move may or may not not happen.

There are greater possibilities of the markets finding resistance at higher levels; it becomes important to lay equal or more emphasis on protecting profits at higher levels.

A cautious and selective approach is advised for the coming week.

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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