Updated: Mar 26
Banking sector tourmoil and rate hikes by the US Federal Reserve and Bank of England, which sped up FII selling weighed on Indian equities, with the market closing lower for the week ended March 24. We need to remember that till date
FIIs have index future short of -183.2K (60% is already rolled over from March Expiry to April Expiry), which shows that FIIs are long term bearish on Indian equities).
Previous week was a volatile but largely quiet week for the markets. Over the passive sessions, the markets were able to defend their opening lows and were trading flat until the last trading day of the week.
The negative closing of the last trading day saw the markets ending in the negative on a weekly note. The trading range was narrower; the NIFTY moved 378.90 points through the week.
The index did end up slightly violating important support; however, it tested another important pattern support as well. The headline index NIFTY50 ended with a net loss of 155 points (-0.91%) on a weekly basis.
Nifty 50 Index Daily Chart
As visible, that daily chart, of previous week has not touched the below level of channel, so it seems that the more downside is on the way. The daily candles are maintaining downward movements below the all daily moving averages, which confirms the more downside is inevitable in near future. 16800 level was last defending level, if it crosses down with heavy volumes, then as we suggested in our previous technical journals, we can see 16000 and then 15200 soon.
Nifty 50 Index Weekly Chart
Privious to previous week, bechmark index, slipped below 100 weekly moving average, but in same week, it recovers and could able to close above that level. But previous week, it was not lucky to close above, that level. We can see that if has broke the 100 WMA and also closed below that level. It is also visible that previous two weeks, index has closed outside the channel at lower level, which indicates bearish moves confirmed for near terms.
Nifty 50 Index Monthly Chart
As we suggested in one of our previous technical journals, the pattern three RED candles can push the market towards one GREEN big candle in following week, but because we are in Long term bearish pattern, so may be this technical rule will not work this time, and it happened the same.
Now the formation of monthly candle with RED color as well as formation is also breaking the current channel, which shows ultra short term is obviously bearish.
Outlook for the NIFTY 50 Index for Coming Week starts from 27th March -2023
Below mentioned Two Major Decision will definately impact Market this week:
First Decision : Increase of STT for F&O Trades
Indian present Finance minister Nirmala Sitharaman’s 25 percent hike in Securities Transaction Tax by hike on selling futures and options caught everyone by surprise. In the F&O segment, the number of retail investors touched 3.2 million in January 2023, a number that could now fall.
Second Decision : End of LTCG on Debt Funds
The biggest casualty is clearly the debt market since mutual funds were the only parties that bought and sold corporate bonds in the debt market. Insurance and pension funds and even banks are usually hold-to-maturity buyers. So the vibrancy in the debt market is bound to be hurt if debt funds don’t get incremental money.
From a technical perspective, the index now rests at crucial levels. In the previous week, it had closed below the 50-Week Moving Average.
This week, the index slipped below the 100-Week Moving Average which currently rests a 17076. However, it still has not violated the falling channel that it has formed. Presently the index is seen testing the lower edge of this falling channel. The coming week is a truncated one;
Thursday is a trading holiday on account of Ram Navmi.
Because of this holiday, we will have monthly derivatives expiry a day earlier than usual.
All in all, NIFTY still has an important support zone of 16850-17000 to defend; it will have to stay above this zone to avoid any weakness from further creeping in.
Support Level for the Coming Week for NIFTY:
As per technical charts, we can see the support coming from the level of 16850 and it breaks decisively, then 16720 is the next support level to be watched, before it drifted further down.
Resistance Level for the Coming Week for NIFTY:
We can see the resistance level could be 17100, followed by 17280. Upside is capped in a wide range itself.
The weekly RSI is 38.82; it has marked a new 14-period low which is bearish.
The Nifty is trading in the 16,910–16,970 zone, where the crucial Fibonacci retracement levels of the previous rise from 16,828–17,207 are placed. This zone shall be the make-or-break support zone. If the Nifty fails to hold it, it will start the next leg of the fall.
Technically, a reversal formation on daily charts and bearish candle on weekly charts indicates further weakness.
The weak sentiment is likely to continue as long as the Nifty trade below 17100, from where the index can slip to 16,700.
A fresh uptrend is possible if the Nifty manages to go past 17,100. The index can then rise to 17,250-17,300.
The daily momentum indicator has a positive crossover, which is a buy signal and supports our view that the pullback rally is not complete.
We can maintain positive outlook on the Nifty. but upside hurdle is at 17,180–17,210. If the Nifty goes past it, only then it can rise to 17,315-17,430.
Outlook for the NIFTY BANK Index for Coming Week starts from 27th March -2023
200-day Simple Moving Average will act as a trend decider, which is currently stands at 39,750, moving below which the Nifty Bank index can slide to 39,000-38,700.
On the flip side, above the 200-day Simple Moving Average or 39,750, the index can rally to the 20-day Simple Moving Average or 40,200-40,300 level.
Thanks for reading.
Disclaimer: I am not a SEBI Registered technical Analyst, so consult your financial advisor, before taking any trade. This technical post is only for learning purposes.