Due to derective issued by authorities to Mutal Funds and other institutions regarding midcap and small cap bubble situations spread the negative sentiments in the market. Volatility ensued domestic markets in the week ended March 15 due to a broad-based selloff in mid- and small-cap pockets amid concerns of frothy valuations.
In the coming week, the US Federal Reserve's interest rate decision, macro-data, and more stress test results from mutual fund houses are expected to keep markets on tenterhooks, advising investors to buy-on-every dip.
Frontline indices Sensex and Nifty declined 2 percent each last week, while broader markets - the BSE Smallcap and the BSE Midcap - slipped up to 6 percent.
Post Market Weekly Analysis
The Nifty 50 weekly Index opened at 22517.50 touched the high level of 22526.60 and slipped down to 21905.65 before closing at 22023.35. So the benchmark index oscillated in a range of 620 points over the previous week's trading sessions, finally closing with a loss of -470.20 points, i.e. in percentage term (-2.09%) on a week-on-week basis.
Nifty 50 Index Monthly Chart
Note that the level of 21900, is very critical on closing basis on monthy chart, because this will confirm the starting of reversal pattern about to taking place on the mont basis, till now a shooting star candle patterns is formed on monthly chart, but there are another 10 trading days to see, where the market closes.
Nifty 50 Index Weekly Chart
Approximately three week's upside move has been drained in a single candle in the previous week. Volumes were huge,which indicates that the upside is capped now up to 22500 levels. If the Nifty 50 Index was not able to cross 22527 levels decisively, it will remain sidesways or drifting slowly slowly downwards.
Till now Index is taking breather at 9-Weekly simple moving average, which will become weak, if it comes again to test it fourth time, because it has already taken support three times previously on 19th Feb 2024 Week, 26th Feb 2024 Week and once again previous week.
Nifty 50 Index Daily Chart
Again in daily chart, one can see that 50-Days simple moving average has been tested three time in previous week. And previously it has tested it on 14th feb 2024.
Unfortunately the next support for this downside move would be on 100-Days SMA, which is placed at 21134.50 now. which could lead a great fall before or after election sentiments. Watch out the level of 21900 on closing basis, below which the market will start taking downward movement.
Nifty 50 Weekly Fibonacci Chart Status
The weekly fibonnaci chart also indicating the 21900 level is very important to get support and breaking down this level will lead to 21700 and 21500 and then fall can extends to 21100 to 21200 range. Forupside 21500 isimportant levl to break out decisevely with volumes.
Nifty 50 Index Weekly Chart -with Technical Indicators
RSI Indicator Pattern
The weekly RSI stands at 64.85; it has formed a fresh 14-period low which is
bearish. It shows a bearish divergence of the RSI against the price.
MoneyFlow Indicator
This weekly indicator is at 75.25 which is in its overbought zone. And indicating and smart money is churning its portfolio, which keeps market range bound. but actually, they are booking priofits on higher levels of stocks.
MACD Indicator Pattern
The weekly MACD stays positive but it sits on the verge of a negative crossover as
evidenced by a sharply narrowing Histogram.
FII's & DIIs Cash Weekly and Monthly Activities
In March, so far, foreign institutional investors (FIIs) bought equities worth Rs 40,710 crore. On March 15, FIIs bought Rs 848 crore worth of equities, while DIIs sold Rs 682 crore worth of equities.
The market participants will watch out for foreign flows this week following SEBI's approval of a raft of relaxations for foreign portfolio investors, alternative investment funds, and entities seeking to raise funds through initial share sales, as part of facilitating the ease of doing business in the securities market.
Outlook for the NIFTY 50 Index for the Coming Week
In the coming week, the market is expected react to the US Federal Reserve, Bank of England, and Bank of Japan's interest rate decisions. Other than that, important macroeconomic data of major countries and S&P Global manufacturing and services PMIs of India, UK, and the US will also be watched out for.
In the week ahead, the global central bank’s monetary policy decision will get investor attention. The US Fed, Bank of Japan, and Bank of England will unveil their rate decisions. There is uncertainty over Fed rate cuts due to an increase in the US unemployment rate and higher-than-expected US inflation. Consequently, the US 10-year yield and dollar index inched higher, and the repercussions were visible in the emerging markets as well
India VIX:
The previous week India VIX closed at 13.69 it touched a high of 15030 and a low level of 13.52, It gained on a closing basis by 0.0775 (+0.57%) on a week-on-week basis.
The volatility increased a bit after a sharp fall in the previous week but remained below the 14 mark weekly, hence it is not worrisome for bulls. India VIX, the fear gauge, rose 0.57 percent to 13.69 from 13.61 levels.
If the VIX spikes above the 16 mark, then bulls may turn uncomfortable,
Support Level for the Coming Week for NIFTY:
The broader support level on the technical chart could be 21900, followed by 21680 levels.
Resistance Level for the Coming Week for NIFTY:
The broader resistance level on the technical chart could be the level of 22300, followed by 22410 levels.
Crude Oil
Brent crude futures, the international oil benchmark, finally closed above the key hurdle, i.e. $84 a barrel, after several weeks of consolidation. In fact, the price has seen a breakout of downward sloping resistance trendline, though the volume was lower than average. Brent crude futures closed at $85.34 a barrel, up 4 percent on weekly basis.
Brent may face the next resistance at $88 a barrel, with support at around $80 a barrel
Oil prices have reacted positively to the bullish demand outlook for crude oil in 2024 from the leading energy research houses (OPEC, EIA and IEA) and further hinting of supply deficit of 0.3-0.5 mbpd during the course of the year. Hence, we see oil prices head for further upside in the short to medium term.
All the major correction should be considered as buying opportunities
Important Upcoming Weekly Activities
US Federal Reserve's interest rate decision
The US Federal Reserve is likely to keep interest rate unchanged in the range of 5.25-5.5 percent, according to economists' predictions. Other than this, market participants will keenly track economic projections and interest rate cut forecast.
According to a Reuters poll, economists predicted the US Fed to start cutting interest rates in June 2024 as the central bank awaits more data to confirm whether inflation is heading convincingly towards the 2 percent target.
In February, the US consumer price index rose to 3.2 percent, slightly above market expectations of 3.1 percent. Core CPI, which excludes food and energy prices, increased 0.4 percent from the last month and 3.8 percent from a year ago.
The movement in US bond yields and dollar index post US Fed's interest rate decision will also influence equity trends. On March 15, the US 10-year bond yield stood around 4.3 percent, while the US dollar index hovered around the 103 level.
Global factors
Apart from this, the Bank of Japan and Bank of England will also announce their monetary policy decisions. Additionally, investors will track the UK producer price index and the S&P Global Manufacturing & Services PMI.
Stress test results
Several mutual fund houses released their liquidity stress test results following SEBI's mandate to Association of Mutual Funds India (AMFI). The move comes on the back of market regulator SEBI’s concern over froth in these schemes amid relentless flow despite large fund houses restricting inflows due to lack of investment opportunity at the right valuation.
Nippon India Small Cap Fund, which runs the biggest small-cap scheme with Rs 46,000 crore worth of assets under management (AUM), said it will need 27 days to sell off half of its portfolio.
Edelweiss Mutual Fund said it would take two days to liquidate 50 percent of the portfolio.
All these mutual fund houses need to publish their stress test results every 15 days beginning March 15.
Technical Analysis
Technically, we expect markets to experience further downward pressure in the coming week after the break of dual support, that is, 20-DEMA and rising trendline on the daily chart.
A breakdown below the previous swing low i.e. 21,850 could result in the next leg of down move to 21,500. The view would be negated if it manages to cross and hold decisively above the 22,250 level.
Reading Current Option Data
Considering the volatile trade with negative bias, the options data indicated that 21,800 is expected to be key support for the Nifty 50 in the coming days, with crucial hurdle on the higher side at 22,300.
On the weekly options front, the maximum Call open interest was seen at 23,000 strike, followed by 22,500 strike and 22,000 strike, with meaningful Call writing at 22,000 strike, then 22,100 & 22,300 strikes.
On the Put side, the 21,000 strike owned the maximum open interest, followed by 22,000 & 21,800 strikes, with writing at 21,000 strike, then 21,800 strike.
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
The technical analysis of the weekly charts shows that the Nifty 50 Index which had broken out from a rising channel when it crossed above 20800 levels is showing signs of fatigue. The levels of 22525 can now be regarded as a temporary top unless taken out convincingly;
The big black candle at the top also hints at a temporary disruption of an upmove. The nearest pattern supports staying significantly below current levels.
Over all the coming week will see the markets wearing a defensive look; there are greater chances that it continues facing corrective pressure with each technical rebound that it may get.
Defensive pockets like IT, Pharma, and FMCG may see some notable improvements in their relative strength; this may result in these groups either showing resilience or showing relative outperformance against the broader markets.
It is recommended to approach the markets cautiously and curtail leveraged exposure.
A cautious outlook is advised 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 anyone to follow my thoughts. I do not have any WhatsApp Group ID or Telegram ID related to it.
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