Updated: Nov 11
The main reason for the benchmark indices taking support and being able to close near one percent higher is that after peaking at 5 percent on October 19the 2023, the 10-year US bond yield started going down and the decline was steep in the last two days, taking the yield down sharply to 4.66 percent on November 3rd, 2023 along with softening of crude oil prices and the US monetary policymakers opted to maintain the key interest rates at 5.25-5.50 percent for the second consecutive time.
Post Market Weekly Analysis
The Nifty 50 weekly Index opened at 19053.40 touched the high level of 19276.25 and slipped down to 18940 before closing at 19230.60. So the benchmark index oscillated in a range of 336.25 points over the previous week's trading sessions, finally closing with a gain of 183.35 points, i.e. in percentage term (0.96%) on a weekly basis.
Nifty 50 Index Monthly Chart
As we suggested in our previous technical journal, the market has already tested its previous breakout level, so the previous support, once again becomes its support for the time being. After losing 558 points in the previous month, we have gained 151 points in the first week of November month. All the Simple Moving Averages are supporting all the candles so far. Let us see, how it works further, because this is 5 week long expiry.
Nifty 50 Index Weekly Chart
The weekly chart is still not in bullish mode, because candles could not break its 9-week SMA and 20-week SMA. The only plus point is that it has reversed from the previous breakout level and spent two days closing above that. This gives hope that, if FIIs stop their relentless selling, the market can move further upward toward its nearest resistance level of 19315; If crosses this level, on a closing basis, the short covering by call writers can force it to touch the level of 19440 to 19550 on an mmediate basis.
Nifty 50 Weekly Fibonacci Chart Status
As we suggested in our previous technical journal this week the market can take support, and it reverses from its lowest point to at least 0.618 level. Now in the coming days, the market seems to touch the level of 0.5 and 0.382. In the case of short covering, the 0.236 level can not be ruled out.
To bring short covering in place, the market has to cross the resistance of 19315-19440 and 19550 levels decisively.
Nifty 50 Index Daily Chart
If we seriously can see the daily chart, we will find that the market is jumping like a frog. A big gap up and a big Gap down becomes a common practice. This is just to trap the sellers on both sides. Everybody knows there is no serious investor in a buying mood as of now.
Nifty 50 Daily Fibonacci Chart Status
We can see the hopping practice in the daily chart of Fibonacci levels. The market touched the lowest level, 1.0 then hopped into the 0.786 level, then again hopped to enter the specified channel, and then again hopped to the 0.618 level. The big players are playing well, and the retail traders are feeling the heat on a day-to-day basis. The next level could be 0.786 or 0.5 and 0.32 level.
Nifty 50 Index Weekly Chart -with Technical Indicators
RSI Indicator Pattern
The weekly RSI is 51.34; it remains neutral and does not show any divergence against the price.
This weekly indicator is at 48.24, which indicates bearishness. the smart money has reduced a slight Option Interest short in the Future Index. But, still, they are sitting on huge short potions so far.
MACD Indicator Pattern
The weekly MACD is bearish and remains below its signal line. It is the continuously widening Histogram that shows accelerated momentum on the downside. And this is happening for the previous 4 weeks.
FII's Cash Weekly Activities
On the last day of trading, FIIs reduced its Future OI only to 13K crore. This is taken as a signal, that FIIs are giving second thought to stop continue selling. But still, they are sitting on heavy options and future selling positions, which makes us cautious and not go for playing the blind long immediately.
We hope that the relentless selling trend from FII is unlikely to continue, going forward, since the main trigger for FII selling, the rising bond yields, has reversed.
"The main trigger for this reversal in bond yields is the subtle dovish commentary from the Fed chief Jerome Powell that despite elevated inflation, inflationary expectations remain well anchored. The market has interpreted this statement as the end of the rate-hiking cycle.
FII's Cash Monthly Activities
The FII selling trend witnessed in September and October has continued in early November, too. In the first three days of November, FIIs sold equity for Rs 3063 crores through the cash market.
Outlook for the NIFTY 50 Index for the Coming Week
The market will be more stock-specific and FIIs are short to the extent of over 87% and this short covering itself will take the markets to further higher levels.
The Nifty has demonstrated a substantial rebound, particularly from the 200-daily Exponential Moving Average (DEMA). However, it's worth noting that resistance levels at 19,330, 19,440, and 19,550 pose challenges.
We need to see, how the GAP UP market reacts on Monday. If FIIs started short covering, then we can see further upside, but if they start selling again then the market will be sold out immediately.
"The correction is anticipated to conclude once the Nifty surpasses the 19550 level, maintaining a bullish outlook as long as it stays above the 19060 level.
However, if the Nifty dips below this level, there is a risk of moving toward the 200-day DEMA, currently situated around 18,650.
The previous week India VIX closed at 10.88 from 10.90 Within five trading sessions, it touched a high of 12.28 and a low level of 10.63, It lost on a closing basis by
-0.0225 (-0.21%) on a weekly basis.
Support Level for the Coming Week for NIFTY:
The broader support level on the technical chart could be in the range of 19000 followed by the level of 18780. levels.
Resistance Level for the Coming Week for NIFTY:
The broader resistance level on the technical chart could be 19400, followed by 19580 levels.
Oil prices settled more than 2 percent lower on the last trading day of the week as supply concerns driven by Middle East tensions eased. Both Brent and WTI crude benchmarks settled down more than 6 percent on the week.
Crude oil prices will drift lower in coming sessions, WTI Dec is likely to trade in the range of $80-$85.
From a technical perspective, the markets have formed an Inside Bar on the charts as Nifty has formed a lower high and higher low.
The more important is the fact that the Nifty has defended the strong support zone of 18850-18900 levels; as of now, unless violated, this zone remains a very strong support zone for the Nifty.
The main concerning factor is the serpent volatility as represented by India VIX. Throughout the previous week, it stayed choppy, but on a weekly note, it remained unchanged.
s we know that the India VIX closed at 10.88 with a change of just -0.21% on a weekly note. Any spikes here can once again leave the markets vulnerable to violent selloff; however, as of now, the zone of 18850-18900 remains crucial support to keep an eye on. So long as Nifty stays above this, it will continue staying in a broad trading range.
Reading Current Option Data
The weekly options data indicated that 19200 levels on the lower side and 19300 levels on the higher side are crucial to watch for bullish and bearish action, respectively.
On the Call side, the maximum open interest was seen at the 19300 option strike, followed by the 19500 and 19400 Option strikes.
On the Put side, the maximum open interest was visible at the 19200 strikes, followed by 19000, 19200, and 19300 Option strikes
This makes the index traded in a tight range. Either side's movement will decide the fate of Nifty’s movement in the upcoming week
The cooling down in volatility also made the trend favorable for bulls. India VIX, which measures the expected volatility for the next thirty days in the Nifty 50 Index, remained within the previous week's range and closed at 10.88 levels, down 0.21 percent for the week.
Important Upcoming Weekly Activities
Over 2400 listed companies are set to announce their Q2 earnings between November 6-12, 2023.
Industrial and manufacturing production numbers for the month of September will be announced on November 10th, 2023, while foreign exchange reserves for the week ended November 3, 2023, will also be released on the same date, in the evening.
Summary - Overall
On Monday, the market can open strong. However, the same is likely to find resistance at 20-week MA; which currently stands at 19482.
So long as Nifty stays above the 18850-18900 zone, it will stay in a broad trading range. However, as the markets near the probable resistance levels, the low VIX is likely to cause trouble again and this is something that one will need to watch.
While investors can continue to ride the technical rebound, it is equally important
that profits are protected at higher levels.
A cautiously positive approach is advised for the day.
Thanks for reading.
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.