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Nifty - Heavy Consolidation; Weekly Range 23300-23790 Likely; Watchful Level 22398 and 23670 for momentum

Throughout the previous truncated week, the markets consolidated heavily, mostly in the capped range but crawling on the higher side. The intraday trend remained practically absent even when the Nifty kept marking incremental highs. The volatility also did not change much compared to last week.

Post Market Weekly Analysis

The Nifty 50 weekly Index opened at 23570.80 touched the high level of 23667.10 and slipped down to 23398.20 before closing at 23510.10. So the benchmark index oscillated in a range of 268.90 points over the previous week's trading sessions, finally closing on a gain of 35.50 points, i.e. in percentage term (0.15%) on a week-on-week basis.

Nifty 50 Index Monthly Chart

The monthly chart shows strength so far. The monthly candle was rejected and found the support from the 9-Month Simple Moving Average. Till the monthly candle is above 23000, there is no change in momentum.

Nifty 50 Index Weekly Chart

The weekly candle is an indecisive candle, which shows that the higher side is capped, and the market will get momentum only above 23670 levels. The market will be weak, below 23300 only.

Nifty 50 Index Daily Chart

On the daily chart, we can see that out of 10 candles, 9 Daily candles end up in RED, which shows bearish or capped momentum. 23650 levels is a strong resistance zone. Only above that level, Nifty can gear up for new momentum.

Nifty 50 Weekly Fibonacci Chart Status

0.236 level to be watched for support levels, and on the higher side 0.786 is the important resistance level for this week.

Nifty 50 Index Weekly Chart -with Technical Indicators

RSI Indicator Pattern

The weekly RSI is at 68.54; it continues to show bearish divergence against the price as it is not marking fresh highs along with the price.

MACD Indicator Pattern

The weekly MACD is bullish and stays above the signal line.

A spinning top has emerged on the candles. This not only reflects the indecisiveness of market participants but such formations also have the potential to stalling an ongoing uptrend if they are formed near the high point.

FII's & DIIs Cash Weekly/Monthly Activities

Foreign Institutional Investors (FIIs) were net buyers, purchasing ₹9,102.87 crore in Indian equities last week, adding positive sentiment to the market. Also, foreign portfolio investors (FPIs) finally snapped their two-month selling streak in Indian equities this month after stability returned to Indian markets with a fall in the 'VIX' volatility index.

FPIs invested ₹12,170 crore worth of Indian equities and the net investment stood at ₹25,085 crore as of June 21, taking into account debt, hybrid, debt-VRR, and equities, according to National Securities Depository Ltd (NSDL) data. The total debt inflows stand at ₹10,575 crore till the third week of June. This comes after FPIs offloaded ₹5,586 crore worth of Indian equities in May.

Outlook for the NIFTY 50 Index for the Coming Week

The coming week is an expiry week for the monthly derivative series. Besides this, over the past sessions, the markets are exhibiting clear signs of fatigue. It has frequently formed weak candles on the daily chart raising possibilities of it taking a

breather and showing some measured corrective retracement. Going by the derivatives data as well, Nifty might face strong resistance in the 23600-23650 zone. This would mean that even if modest upsides are seen, a sustained and trending up-move cannot be expected unless the zone of 23600-23650 is taken out convincingly. Therefore, all moves on the upside should be used for guarding profits at higher levels.

The pattern analysis shows the Nifty trying to break above the small rising channel that it has formed. However, the Index is seen forming incremental highs but it is unable to achieve a clean breakout. Unless the zone of 23600-23650 is taken out convincingly, the markets may find it difficult to have a sustained and trending up-move.

India VIX:

The India Vix inched higher by just 2.79% to 13.18 on a weekly basis.

Support Level for the Coming Week for NIFTY:

The broader support level on the technical chart could be 23300, followed by 23180-23050 levels.

Resistance Level for the Coming Week for NIFTY:

The broader resistance level on the technical chart could be the level of 23650, followed by 23790-24000 levels.

Important Upcoming Monthly/Weekly Activities

Global Cues

On the global front, major economic data like the US Q1 GDP data and the US core PCE price index will be released on June 27 and June 28 respectively. The movement of the US dollar index and US bond yields will be crucial. Along with these, US initial jobless claims, UK GDP, and US Fed minutes will also be released this week.

‘This week promises to be pivotal for global markets. Economic indicators from Australia, the US, and China will not only provide insights into current inflation trends and economic health but will also likely influence central bank policies and market sentiment. These developments will be essential for traders and investors looking to navigate potential shifts in market dynamics.

On June 28, the US core personal consumption expenditures (PCE) price index will be closely watched by market observers as recent US consumer and producer price data for May indicated downside surprises, reflecting further progress in inflation control. 

The PCE price data --the US Fed’s preferred inflation gauge, will be scrutinized for signs of continued progress. Further progress in inflation control could provide the Fed with greater flexibility around upcoming rate cuts.

‘Looking ahead, attention will remain on updates related to the budget and global market cues, particularly from the US. The Dow Jones Industrial Average recovered significantly following a slight decline, while the Nasdaq Composite and S&P 500 reached new record levels, suggesting a positive sentiment overall.

Crude Oil:

International crude oil prices eased about one percent in the previous session on worries that the global oil demand growth could be hit by a strong US dollar and negative economic news from some parts of the world. Oil prices declined despite signs of improving oil demand in the US and falling fuel inventories that helped boost crude prices to hit a seven-week high throughout last week.

Brent futures fell 47 cents, or 0.6 percent, to settle at $85.24 a barrel, while US West Texas Intermediate crude (WTI) ended 56 cents, or 0.7 percent, lower at $80.73. The decline pushed WTI out of technically overbought territory for the first time in four days, while Brent futures remained overbought for a fourth day in a row for the first time since early April.

For the week, both crude benchmarks were up about three percent after gaining about four percent the week before. The US dollar rose to a seven-week high compared to a basket of other currencies with the US Federal Reserve's patient approach to cutting interest rates contrasting with dovish stances elsewhere.

The US Fed hiked interest rates aggressively in 2022 and 2023 to tame a surge in inflation. The higher rates boosted borrowing costs for consumers and businesses, which can slow economic growth and reduce the oil demand.

A stronger US dollar can also reduce the demand for oil by making greenback-denominated commodities like oil more expensive for holders of other currencies. Heightened geo-political tensions in the Middle East are likely to prop up the risk premium on crude oil this week, supporting the price uptrend.

Technical Analysis

Although volatility may increase following two weeks of subdued activity, the outlook is expected to stay optimistic, buoyed by strong performance in banking and early signs of a rebound in the IT sector, according to market experts. Volatility may be heightened by the scheduled expiration of June month derivatives contracts. 

In the case of profit-taking, the Nifty index is anticipated to find support in the 23,100-23,300 range, while a decisive close above 23,600 could propel it towards a new milestone at 24,000.

Besides banking and IT, optimism is noted in the metals sector, and traders are advised to selectively explore budget-related opportunities in agriculture, defense, and railways for potential long trades.

Daily chart analysis indicates that Nifty has been consolidating within a broad range of 23,400 to 23,700, and this trend is likely to continue.

There are no significant triggers for aggressive buying or selling at present. Despite this consolidation phase, the market's undertone remains bullish, suggesting that buying on dips will lend resilience to the market. However, strong upward movements are expected to attract profit booking, making a sustained rally challenging.

Reading Current Option Data

The highest concentration of open interest on the Call side is at the deep OTM strike of 24,000. Before that, significant accumulation is evident at the slightly OTM 23,500 call strike, which has served as a strong barrier all week.

This area will be closely monitored after the extended weekend, as a breakthrough above 23,600 could reinvigorate momentum in the current sluggish market conditions. 23700, 23800 and 23900 calls indicatinging key rsistance.

Conversely, the 23,500 put strike has the highest concentration of open interest, with notable buildup seen at the 23400, 23,300, 23200, and 23100 put, indicating key support.

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 position as of the last trading day:

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

Summary - Overall

Overall, the current technical setup shows a lot of indecisiveness, discomfort, and tentativeness among market participants. The present structure warrants that we do not chase the up-moves blindly; instead, unless a trending move takes place, we utilize these moves to guard profits at higher levels.

It would be prudent to protect and take profits in the stocks that have run up too hard and rotate the investments into the stocks that are showing promising chart setup along with improving relative strength. While keeping leveraged exposures at modest levels, it is recommended to rotate the investments effectively while maintaining a cautious view on the markets 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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