top of page

Nifty - Crossed 21000; Retailer's Power or FOMO or FII's Buying Spree?; Now what's next?

In the last technical journal, we could not expect the market to jump 3.46% in the week, after jumping 2.39% in the previous week jump. But it zoomed in and crossed 21000, before closing a little short because of the profit booking. Besides Short covering by FIIs and FOMO by retailers, there could be some more reason for this rally, which is written below:


From the low of 19840 to 21000, the Index took only 6 weeks. What could be the ground reasons?


The possible answer could be the belief that this administration has been able to navigate the tricky geopolitical situation deftly and keep India firmly on the growth trajectory while keeping the fiscal position in check has inspired confidence among investors. The continuity of this government thus is inextricably linked to India’s growth story, thus the election outcome has been a key driver.


In the coming week, after the consistent runup in the past six weeks, the market is expected to see a rangebound trade and consolidation, with a major focus on the Fed meets outcome and the Powell commentary especially after the latest better-than-expected jobs data and lower unemployment rate in November, and monthly inflation data by US & India.


Post Market Weekly Analysis


The Nifty 50 weekly Index opened at 20601.95 touched the high level of 21006.10 and slipped down to 90507.75 before closing at 20969.40. So the benchmark index oscillated in a range of 498.35 points over the previous week's trading sessions, finally closing with a gain of 701.50 points, i.e. in percentage term (3.46%) on a week-on-week basis.


Nifty 50 Index Monthly Chart


Index had crossed the long awaiting channel and was able to close above that. From last month's closing, we anticipated, that the Nifty 50 Index could take a ride, but the Election Results took the lead and pushed the index to another lifetime high. The monthly index will be on the higher side until it keeps its head above 20183.


Nifty 50 Index Weekly Chart


The huge gap up opening in the weekly index confirmed that it is going to cross its previous lifetime high, but it will reach 21000, it was not immediately in our cards. Now when the index was able to close on the higher side, it confirms that there is no weakness in the index for the long term. Well, consolidation on these levels can not be ruled out. It can take a breather to move forward.


Nifty 50 Index Daily Chart


The Nifty 50 Index has been consolidated within the range of the last three trading sessions. It could be possible, before going further upward, that the index can spend some time near the 21000 level, and if it happened, it would be healthy for the market.


After the low level of 26th October 2023, the market has not seen a meaningful retracement. So the consolidation could be a little larger if it happened.

We can not rule out that in the coming days, the index can touch the level of 21300.


Nifty 50 Weekly Fibonacci Chart Status


The previous week's Fibonacci chart showed that the index could touch the level of 20290.70, but the Index jumped and touched 21000 due to FOMO in retail traders along with FIIs buying spree and short covering move. The next level could see 21500, but most probably, it could happen after consolidation only.


Nifty 50 Index Weekly Chart -with Technical Indicators


RSI Indicator Pattern


The weekly RSI is 72.40; it has marked a new 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 68.46, which indicates the market has more potential to catch the highest mark of 80.00 or more.


MACD Indicator Pattern

The weekly MACD has shown a positive crossover; it is bullish and trades above the signal line, which means we can see more upside in the coming days.


FII's Cash Weekly Activities


The major change is that from -25K FIIs reached +36K a positive number. The FII's large number of purchases, which includes 5000, on the second day of the week, helped the market to move ahead.


Foreign institutional investors came back strongly in December, buying nearly Rs 10900 crore worth of shares in the current month so far, in addition to more than Rs 7000 crore worth buying in the previous month.



FII's Cash Monthly Activities


The December purchases by FIIs are double the DII's purchase numbers. This shows the confidence among buyers, to move forward.


Outlook for the NIFTY 50 Index for the Coming Week


The technical analysis of the weekly chart shows that Nifty has not only scaled a fresh lifetime high level, but it has also broken out from the rising channel with a gap. In the process, the Index has managed to drag its supports higher from 20000 levels to the 20450-20550 zone. So long as the index keeps its head above this zone, the breakout and the trend will stay intact.



The closing of the Index just below the upper Bollinger band seems to have fortified the chances of it moving higher; however, given the kind of runup the Nifty has seen, it has gone a bit ahead of the curve. In this case, with 21000 not taken out, we may see the markets slipping into some ranged consolidation.


India VIX:


The previous week India VIX closed at 12.47 from 12.38 Within five trading sessions, it touched a high of 14.08 and a low level of 11.34, It gained on a closing basis by

0.0875 (0.71%) on a week-on-week basis.


Support Level for the Coming Week for NIFTY:


The broader support level on the technical chart could be in the range of 20700 followed by the level of 20580 levels.


Resistance Level for the Coming Week for NIFTY:


The broader resistance level on the technical chart could be 21090, followed by 21265 levels.


Crude Oil


The market took major support from falling oil prices as the lower oil prices not only reduced the fiscal worries but also boosted the earnings of companies that see the lower input cost. India is the net oil importer.


Brent crude futures, the international benchmark for oil prices, extended their southward journey after breaking the 200-week EMA (exponential moving average) in the previous week. The prices corrected 3.85 percent during the week to settle at $75.84 a barrel, though saw some buying at lower levels.


It was at $96.55 a barrel on September 25, which means a 21.5 percent correction so far. Hence, the market participants will keep an eye on oil prices.



Important Upcoming Weekly Activities



US FOMC Meet


Most expect the Fed funds rate to remain unchanged at 5.25-5.5 percent, while they look for any cue about the timing for the beginning of the rate cut cycle, given the consistently falling inflation though still above the Fed's 2 percent target.


Some expect the rate cut may start by the end of the first quarter or the beginning of the second quarter of 2024.


US Inflation

The market participants will also keep an eye on US inflation numbers released a day before the FOMC meeting outcome, i.e. December 12. Inflation and core inflation numbers are largely expected to be steady in November at 3.2 percent and 4 percent respectively.


Global Economic Data


Apart from the above two key factors, the European Central Bank and Bank of England will also announce their interest rate decision next week on December 14, which are also expected to be unchanged at 4.5 percent and 5.25 percent.


Further, manufacturing and services PMI Flash data for December will also be released by key economies including the US, Europe, Japan, and the UK.


CPI Inflation

Coming back to India, the CPI inflation will be released on December 12. It is expected to increase to around 5.5-6 percent for November, from 4.9 percent in October due to higher food inflation, though core inflation may remain steady at around 4.3 percent in November.


Industrial and manufacturing production numbers will also released on the same day, which is expected to expand in October.


WPI inflation will be announced on December 14, while the bank loan & deposit growth for the fortnight ended December 1, foreign exchange reserves for the week ended December 8, and balance of trade data for November will be released on December 15.


Technical Analysis


The market momentum looks very strong with the Nifty50 hitting the 21,000 mark last week. And overall expect the trend to remain positive, but considering the one-way rally in the recent past, we can see some kind of consolidation in the coming weeks before getting into another leg of up move towards 21,500-22,000 levels.


From a technical standpoint, the previous week has created a gap. In the process, the index has shifted its support zones higher in the range of 20450-20550 levels from 20000.


The Nifty has also closed above its upper Bollinger band. Even if there is a temporary pullback inside the band, the markets may further their uptrend even with the possibilities of some consolidation at current levels.


The behavior of the NIFTY vis-à-vis the level of 21000 is crucial. If the index can take this level out and stay above it, the markets will open up some more room for themselves on the upside.


However, until this happens, the markets also stare at entering into a period of consolidation and take a breather after very strong moves over the past few weeks.



Reading Current Option Data


The maximum weekly Call open interest was seen at 21000 strikes, followed by 21500 and 22000 strikes, with Call writing at 22000 strikes, then 21500 and 21000 strikes


The maximum Put open interest was at the 20900 strike, followed by the 20000 strike and the 20800 strike, with Put writing at the 20300 strike, then the 20500 strike.


Summary - Overall


Overall this is the time when one needs to get defensive and cautious.

Protecting gains at current levels is of paramount importance. While fresh purchases be made highly selectively, emphasis should also be placed on protecting profits at current and higher levels.


The defensive pockets like FMCG, IT, PSE, etc., may continue to nd traction over the coming days. While getting extremely selective with new purchases, profits must be guarded at higher levels.



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.

59 views0 comments

Comments


bottom of page