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Nifty - Kissed new all-time high; Made double TOP & had a great fall; Watch 21658 Level for momentum

The benchmark indices closed off a record high due to a correction in the Bank Nifty50 Index and seem to have turned cautious ahead of SBI earnings over the weekend, and RBI monetary policy next week.

The market, on February 5, will first react to State Bank of India (Negative or partially positive) and Tata Motors (Positive) quarterly earnings.

In the coming week, the market may see some consolidation after a recent rally and maintain caution ahead of RBI policy, but overall, the sentiment seems to be in favor of bulls given the positive global cues. While all the key sectors are playing their part, consistency in the banking majors would be critical for a steady uptrend

Post Market Weekly Analysis

The Nifty 50 weekly Index opened at 21433 touched the high level of 22126 and slipped down to 21429 before closing at 21853. So the benchmark index oscillated in a range of 697.20 points over the previous week's trading sessions, finally closing with a loss of +501.20 points, i.e. in percentage term (+2.35%) on a week-on-week basis.

Nifty 50 Index Monthly Chart

After the formation of Dozi in the previous month, the Index started with an Inverted Hammer in the first week of the month. It is too early to say, where the monthly index will go. For bearish we will wait to break the levels of 21658 decisively. Above 22000, once again we can see 22200 levels soon.

Nifty 50 Index Weekly Chart

The Market is in consolidation mode in the weekly chart, because the index is not giving up on the downside, as well as the market is booking profits on higher levels. In short Market is best for investors, but a little bit jittery or choppy for traders. Below 21658, the market can drift down up to 21429 immediately, and it breaks down from there, it can go down to 21200 soon.

Nifty 50 Index Daily Chart

On the daily chart, we have seen a quick profit booking from the all-time high. If we break up again the level of 21901, we can see 22000 and then 22200 immediately. And if we break the level of 21805, we can see the quick downside till 21658 immediately. Below this, we should see the level of 21500 and 21400 soon.

Nifty 50 Weekly Fibonacci Chart Status

So the market traveled on both sides in the previous week and fixed its resistance level at 0.00, which means at 22126 for the time being. the immediate support level is at 0.786 means at 21350. We are expecting the market to consolidate in between ranges in the coming week.

Nifty 50 Index Weekly Chart -with Technical Indicators

RSI Indicator Pattern

The weekly RSI stands at 70.34; it is at 70 which is near the overbought area. It stays neutral and does not show any divergence against the price.

MoneyFlow Indicator

This weekly indicator is at 82.07, which is still its overbought zone.

MACD Indicator Pattern

The weekly MACD stays bullish and above its signal line.

FII's & DIIs Cash Monthly Activities

Foreign institutional investors remained net sellers even in the week gone by, which may be due to a spike in US bond yields to over 4 percent, and expensive equity market valuations.

Their net sold around Rs 1808.89 crore worth of shares in the cash segment last week, but domestic institutional investors continued to provide strong support by compensating the FII outflow by a wide margin as they bought more than Rs 2463.16 crore worth of shares during the week.

Previous Week's FII positions in Options & futures and Cash Segment

Outlook for the NIFTY 50 Index for the Coming Week

In the previous week, Indian markets posted hefty gains amid a growth-oriented budget from the government.

Besides, positive macroeconomic data boosted the sentiments. This week, investors will be focusing on the remaining quarterly results of some major companies across the sectors.

Besides RBI's interest rate decision, deposit growth and bank loan growth data in India, along with initial jobless claims, and balance of trade in the US are major market events that will keep the markets buzzing.

India VIX:

The previous week India VIX closed at 13.8650. it touched a high of 16.57 and a low level of 14.69, It gained on a closing basis by +0.8325 (+6.00%) 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 21658 followed by 21450 and 21200 levels.

Resistance Level for the Coming Week for NIFTY:

The broader resistance level on the technical chart could be 22000, followed by 22200 levels.

Crude Oil

Crude oil prices remained favorable for oil-importing countries like India, which is also one of the key reasons to support the stock market. International benchmark Brent crude futures lost the previous two weeks' gains during the week ended February 2, declining 6.8 percent with higher volumes.

Possible higher interest rates, weak growth in China, and unconfirmed media reports of progress in negotiations to pause the Israel-Hamas conflict caused the downtrend in prices.

On the higher side, the $85 a barrel mark seems to have capped as it remained below the same since November 2023 hovering around 200-day EMA, while on the lower side, $75 a barrel seems to be a support.

Expect the oil prices to remain rangebound in the near term.

Important Upcoming Weekly Activities

RBI Policy

The Monetary Policy Committee is expected to keep the repo rate unchanged at 6.5 percent with a less hawkish tone, but the commentary will be keenly watched in terms of hints about the beginning of the rate cut cycle and growth-inflation trajectory.

We expect the committee to maintain the monetary policy stance pointed towards a withdrawal of accommodation despite deficit liquidity conditions, but the communication is likely to turn materially less hawkish.

We can expect a window for rate cuts opening in Q1 FY24-25.

Domestic Economic Data

Apart from the monetary policy and quarterly earnings, the street will also keep an eye on the services PMI data for January scheduled to be released on February 5. India's services PMI data jumped to 59 in December 2023, from 56.9 in November and experts expect it to be climbing further in January.

Further, bank loan and deposit growth for the fortnight ended January 26, and foreign exchange reserves for the week ended February 2 will also be released next week on January 9.

Global Economic Data

On the global front, apart from a speech by several Federal Reserve officials, the market participants will focus on the monthly services PMI data for January, US jobs data, and China inflation numbers for January.

Technical Analysis

Technically, the Nifty 50 Index reached the crucial 21,850 level after failing to hold the new record high on Friday. The index, at the top, has formed a Shooting Star kind of pattern formation as well as a Double Top type of pattern on the daily charts, which are trend reversal pattern.

Hence, unless and until the index gives a strong close above the record high of 22,134, the uptrend may not be possible and the index may continue consolidation with immediate support at 21,700 and crucial at 21,500 mark.

"On the technical side, the new high of Nifty is a double top, and a close above the level of 22,126 in February month could trigger a fresh round of rally. Therefore, investors and traders can only make aggressive bets above the same level. On the downside, 21,500 could be a zone of staggered buying next week.

Reading Current Option Data

The options data suggested that the 22,100-22,100 area is expected to be a key resistance for the Nifty 50, while the 21,600-21,500 may act as a support in the coming sessions.

As per the weekly options data front, the maximum Call open interest was seen at 23,000 strikes, followed by 22,700 strikes, and 22,200 strikes, with meaningful Call writing at 22,100 strikes, then 22,800 and 22,200 strikes.

On the Put front, the 21,000 strikes owned the maximum open interest, followed by the 21,600 strikes and 21,500 strikes, with writing at the 21,600 strike, then the 21,000 strike and 21,900 strike.

Bulls were seen active as strong Put writing was observed at 21,500 & 21,600 strikes in Nifty while Call writers (bears) were seen exiting from 21,700 & 21,800 strikes. This indicates that the support for the index has got stronger.

The option activity at 22,000 strike will provide cues about Nifty’s direction in the coming week.

Participant Wise Final F&O Weekly Summary

FII's, PRO, and Clients F&O Summary by Segment

FII's positions as of the last trading day:

PRO's positions as of the last trading day:

CLIENT's position as of the last trading day:

Summary - Overall

Confirmation of a bullish trend resumption would only occur with a decisive breakout above the double top, which is currently identified at around 22,125. Conversely, a break below the support level at 21,500 could indicate a bearish momentum, in the scenario of a breakout above 22,150, Nifty may experience upward momentum, potentially reaching levels such as 22,500 and beyond.   

Given the heightened volatility in the near term, traders are advised to approach the market with caution and implement strict risk management measures to navigate potential fluctuations.

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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