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Nifty - India VIX at Multi-Year Low; 19500 -19867 is a Critical directional Range

The main observation is that the benchmark index was unable to move higher than the previous week’s high point. And second observation is that it also formed a lower high and a similar low compared to the previous week.

The Nifty 50 Index opened at 19748.45, touching the new all-time high level of 19867.55, and slipped down to 19563, before closing at 19646.05. so the benchmark index oscillated in a 304-point range over the previous five trading sessions, finally closing with a net loss of 98.95 points, i.e. in percentage term (-0.50%) on a weekly basis.

Nifty 50 Index Monthly Chart

We have updated the channel, to make it a proper shift upward similar the market is behaving. Now we can see that the market is still moving upward, calm and composed. the July month Expiry is too good for the monthly chart. Even if it got the rejection from higher levels, it managed to close its previous month's high levels, which shows strength will not be too bad in the coming month.

Nifty 50 Index Weekly Chart

Weekly closing on an indecisive candle, shows that the benchmark index will not be ready to surpass the new all-time high soon, as bulls are not made up their mind to make new positions above 20000 levels. 19563.10 was the lowest level, which is touched by the weekly candle, which is just less than one point more than its previous to the previous level lowest level, which was 19562.95.

Nifty 50 Weekly Chart (Fibonacci Chart Status)

The Weekly candle was hanging between 1.414 and 1.272 Fibonacci levels because the weekly candle closing is the Doji candle. It seems it can spend more time between those levels, till any side direction is finalized by the index.

Nifty 50 Index Daily Chart

The daily Index Chart is a little bit more deteriorated by some big red candles. On Thursday and Friday trading sessions could not hold the FII's selling pressure. This low expectation of the market tells us one thing, very sharp moves are not on the cards. So even if some correction is due, traders should not aim for very ambitious targets. On Monday, if the high of this week, i.e. 19,867 is not breached towards the upside then this level will become the nearest resistance.

Nifty 50 Index Hourly Chart

The last five trading session, indicates, that profit booking is the first motto for traders on every rise because the lowest level of India VIX forced them to book profit on the higher side.

The uptrend seems to be fading now as bulls are finding it difficult to make new long positions around the 20000 levels. Although a retracement of around 430 points from the all-time high of 19,991 to 19,560 has already materialized, this is probably not enough and some more of it can come in the next week.

FII's Weekly Activity

As we suggested in our last week's technical journal, we need to keep an eye on the FII Index Future Open Interest. On 21st July it was 88.7K, and it increased to 91.2K on 24th July (Monday), but later it started decreasing from 91K to 13K on 28th July. If anybody observed it, in the previous week's trading session days, they could understand that FII was on a selling spree.

August Expiry Preparation

The First day of the August Expiry session is indicating that FIIs are already made their extra positions on the PUT side. and these are in a huge quantity of 1.5 lakhs more than the CALL side.

Reading Put Call Ratio

These positions can make the higher side limited.

Outlook for the NIFTY 50 Index for Coming Week starts from 31st Jul 2023

After clocking four straight green weeks, the last week broke the winning streak as the benchmark Nifty 50 index ended the week lower. This week's selling pressure was quite evident with the banking space sliding to lower levels.

The Global shares traded mixed on Friday as investors digested monetary policy steps/messages from Japan.

The Bank of Japan's policy shift could have seismic implications for global money flows, since a cheap yen that's been inexpensive to borrow has been a mainstay of capital market funding for years, and it now faces upward pressure from rising Japanese yields just as global rates seem to peak.

India VIX

The previous week India VIX closed at 10.14 from 11.48, again came off by 11.75%

How is INDIA VIX Calculated?

The calculation of VIX is derived from options prices and a lower value means investors are expecting lower volatility in Nifty 50. Precisely, a value of 10.14 means that the market is expecting the Nifty 50 index to move (up/down) by 10.14% in the next 1 year. That’s super-low volatility.

This week, India VIX closed 11.75% lower at 10.14, which is the lowest weekly closing ‘ever’. As far as we can see in history, (till 2009) it is an all-time low weekly closing which is surprising considering the fact that we have witnessed some retracement in the Indian markets.

Support Level for the Coming Week for NIFTY:

The broader support level on the technical chart could be in the range of 19500 followed by the level of 19210.

Resistance Level for the Coming Week for NIFTY:

The broader resistance level on the technical chart could be 19850 followed by the levels of 19990.

Reading Current Option Data:

As per option chain data, 19800 CE holds the highest open interest (OI), at 1.92 lakh shares. Hence, this level will be difficult to be crossed this week but we should give more relevance to 19,867 as a stronger resistance.

On the lower side, 19,560 - 19,600 is turning out to be a good support area which reversed the index around three times in recent times. Hence traders with short positions should watch out for this level.

From a very short-term perspective, the derivatives data show mild support

for NIFTY at 19500 levels; if this is violated, then the major support zone of

18900-19000 will come into focus.

The coming Monday can see an up-move because money flow is indicating squeezed situation.

All up-moves should now be used more for protecting the existing profits at current and higher levels while fresh purchases should be kept limited to low-beta stocks and defensive pockets.

A cautious outlook is advised for the coming week.

Thanks for reading.

Keep Trading

Stay Invested


Neeraj Bhatia

(Managing Director)

Disclaimer: I am not a SEBI Registered technical Analyst, so consult your financial advisor, before taking any trade. This technical weekly Journal post is only for learning purposes and its a free of charge. The views written here are entirely only my personal views. I am not suggesting here anyone follow my views. I do not have any WhatsApp Group ID or Telegram ID related to it.

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