Updated: May 22
As we stated in our previous technical journal that the Nifty-50 Index needs to maintain weekly closing above 18265, to continue its ATH journey. Which was going smoothly till last Thursday, when the benchmark index touched its highest point of 18267.45, but the news of MSCI regarding HDFC twins on Friday, makes the market sentiment negative for the week.
Those who are looking for more knowledge about MSCI India sectorial index, please read the article below link:
Overall Nifty 50 Index closed near the low point of the week, the NIFTY index closed absolutely fat with a negligible gain of just 4 points (+0.02%) on a weekly basis only.
Let us discuss the technical chart of all major time frames:
Nifty 50 Index Monthly Chart
It is too early to say nothing about the monthly chart of Nifty because it is still in between in the formation of the monthly candle. At least it is a piece of good news that, it has started with the rejection from the stated level, but still holding the 18057 level, which could once again form it to continue its journey towards the higher end, but the only condition is, it should not breakdown 18042 in coming week.
Nifty 50 Index Weekly Chart
Previously we suggested a resistance level from where Nifty can take retracement, and exactly the same happened on the last day of the previous day's trading session. It is said that the piece of information from MSCI against HDFC twins made the week bearish, but as per technical data suggest, it seems that FIIs were well aware of this news and they were writing the calls or making short positions on 18100 and 18200 on the day of expiry, i.e. Thursday, on 4th May 2023, but somehow DIIs manage to take Nifty higher with cash buying, which concludes their session in big losses. But they got the chance, with the news to make sentiment more bearish on Friday 5th May 2023, and grabbed the more bigger profit in their kitty.
Status of Head & Shoulder Pattern on Nifty Weekly Chart
Technically head and shoulder pattern is still valid with a slight upward of its right shoulder. It took rejection from the stated point and now the Nifty-50 index weekly chart resembled the daily chart with a shooting star pattern, which has bearish implications.
Status of Nifty Fibonacci Chart on Weekly time frame:
In our previous technical journal, we stated caution because the level of 61.8% had a combination of resistance levels, which now ends up with a shooting star candle, which is a bearish sign for further trading sessions.
Nifty 50 Index Daily Chart
Even all the moving averages, help us to tell us technically we are bullish, but to be in this stage, the Nifty 50 index needs to hold the range of 18042 to 18057 on Monday, 18081 would be the level, where we can think Nifty is taking its support, but only above the range of 18160 and 18181, we can say, that we are ready to move ahead again for the level of 18265-18300 zone at least.
Below 18042, Nifty can retest the levels of 17950 and then 17800, and in the worst-case scenario, it could touch the level of 17717.
FII s Activities in the previous week:
At least we can say with these data, that FIIs have started buying quality stocks again after a long gap. But this seems only for a short-term basis. Because DIIs are also started churning their portfolios from less leveraged stocks to high market capitalization stocks.
FIIs have reduced their index short position drastically, which shows they have made up their mind for trend reversal, at least from outflow to inflow in the cash market. Well, in short, they can increase their positions only in good fundamental stocks, on the basis of corporate results and it is not necessary, as these stocks belong to an index heavy weight.
Outlook for the NIFTY 50 Index for Coming Week starts from 8th May 2023
Well, the Nifty 50 index has dragged its resistance lower between the 18100-18200
zone as shown by the high addition of Call Option Interest in this zone, which makes 18267 level, is very important resistance for the coming week.
In the coming week, we need one more confirmation, to find the truth that whether the Nifty 50 index has given us a technical clue that it has formed an intermediate top for the short-term, which will be ensured if the Nifty index starts closing below 18042 on a daily chart.
A candle which is almost a Shooting Star formation has emerged on the Nifty 50 index weekly chart. This may lead to a potential formation of an intermediate top subject to confirmation on the next upcoming weekly candle on a closing basis.
Support Level for the Coming Week for NIFTY:
The broader support level on the technical chart could be 18042, if Nifty could not sustain this level, then the next level would be followed by 17966, and if again this level break decisively, then the next level would be 17900 before it will touch 17844, 17800 and then in worst case the level of 17710.
Resistance Level for the Coming Week for NIFTY:
The broader resistance level on the technical chart could be 18160 and then 18181, followed by 18267 and 18349, and then the highest level could be 18445.
The trading range is likely to get wider from 17700 to 18500 this week.
The India VIX was up by 4.82% from 11.73 to 12.29 levels. Volatility spiked during the session and closed near its upper band, which gave discomfort to the bulls. And the bulls have witnessed on Friday how it can leave the markets vulnerable to profit-taking bouts
As we stated in our previous technical journals, we should not need to chase the index top blindly. Low India Vix can force trades to book profits from time to time.
It would be the best approach to stay only in highly selective sectors. It would make more sense to focus on stocks from the broader universe that have strong and rising relative strength and have promising individual technical setups.
While continuing to protect profits vigilantly at higher levels, a cautious outlook is advised for the days in the coming week.
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.