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Nifty - Low Sentiment @ Budget Week; All Eyes on 200DMA

We continued expressing our bearish views from the last many weeks, which now comes true.

In our last technical journal, we clearly suggested that we need to be cautious approach along with the downside movement heading towards us.

For this week, we need to go for a reverse approach to the analysis of the Nifty-50 Index (From Day Chart to Month Chart)

Nifty-50 Index Daily Chart

The Nifty-50 Index, which was taking support on the 20 Week daily moving average for the previous 5 weeks in a row, ultimately broke down in one way, with the help of Hindenburg Research’s report on the Adani Group stocks. It hammered so badly all the stock of Adani Group, which made the market breadth negative and there was selling across the board, in all sectors.

Tt violated crucial support levels and dragged resistance levels lower. We can see in Daily Chart, that the Nifty-50 Index has broken all the major daily moving averages and it is hanging only just above the 200 daily moving averages.

And now the million-dollar question is that if hammering on Adani group stocks continues then the market can break the last support of 200DMA, which is around 17287.50 soon.

Nifty-50 Index Weekly Chart

The Nifty-50 Weekly Chart shows that the major support is broken with huge volumes and wide price action. The Nifty 50 Weekly index saw a wide trading range of 707.70 points over the previous week. It eventually ended with a net loss of

423.30 points (-2.35%); from the intra-week high point, the NIFTY -50 Index came off by 600-odd points.

Nifty-50 Index Monthly Chart

The Nifty-50 Monthly Index chart is near to breaking 17200, the most important level, which will open the widest range of 15000 to 18000 levels.

Outlook for the coming Week starting from 30th Jan-2023:

The coming week is crucial for the market as there are a lot of events lined up, including the Union Budget, the US Federal Reserve commentary, monthly auto sales numbers, and corporate earnings, all of which will give a direction to the market

The Nifty -50 daily Index made the damage that the past sessions have inflicted on the markets has been significant from a technical perspective, more so when we head into the Union Budget this coming week.

The NIFTY has violated the 20-Week MA on the weekly charts stands at 17896 and also the 100-DMA which is currently placed at 17950. In the process, the nifty-50 index has dragged its resistance points lower.

Volatility Spiked: INDIAVIX rose sharply by 25.65% to 17.32, which shows fear in the market.

The Support for the Coming Week:

The coming week has strong support at 17400, and if it breaks with volumes, it can slip down up to 17250 levels.

The Resistance for the Coming Week:

The coming week has strong resistance at 17750 and, if the market will able to break it upward, then we can touch the level of 17860

The Union Budget 2023 is scheduled to be presented by Finance Minister Nirmala Sitharaman on February 1st, 2023 to the market, and the Union Budget is scheduled to be tabled on Thursday, February 02.

This is set to infuse a lot of volatility over the coming days. On one side, the markets are yet to finish their reaction to Hindenburg Report where the allegations leveled are absolutely serious in nature; on the other hand, it is also set to react to Budget proposals that will be presented.

While the markets face the double-edged sword of volatility, the best way to

navigate such an uncertain environment is to keep leveraged exposures at

modest levels.

The NIFTY-50 Index will not show any meaningful and sustainable up move so long as it stays below 17950.

Overall, a highly cautious approach is advised for the coming week.

Disclaimer: I am not a SEBI Registered technical, so just remember, to consult your financial advisor, before taking any trade. This technical post is only for learning purposes.

Thanks for reading.

Keep Trading

Stay Invested


Neeraj Bhatia

(Managing Director)

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