Nifty - Maintaining 17800 Level with Low VIX is crucial
The previous week was silent and stable and with the benchmark indices closing largely along the flatline. The news flows could not able to lift the market upward but helped the market to be calm and steady. At least the downfall was restricted.
The directional bias remained virtually absent as the Nifty 50 Index continued to trade below crucial resistance levels. In the end, the benchmark index ended with a net gain of just 2.45 points (+0.01%) on a weekly basis.
Nifty 50 Index Monthly Chart
The Nifty 50 Index Monthly chart is trying to keep itself upside from last month's low level of 17662. It has seen rejection from the low level of 17353 during Feb 2023. This shows that the buyers are available at the lower levels.
In Feb-2023, till now FII's already pulled out 9600 crores from Indian Equity. This figure was 28852 Cr in the entire Jan 2023.
The main question is if FII institutions are pulling out money on a regular basis, then who is buying, Number of Domestic Institutions is not encouraging, but somewhat matching is okay. So it means the difference in numbers goes to retailers only.
During in month if the level of 17662 is breached, we can see a good amount of fall in our equity markets.
Nifty 50 Index Weekly chart
The Nifty 50 Index Weekly Chart is showing nervousness, but due to the long consolidation phase of the last 5 weeks, it is not going anywhere. It is still stuck in a broad market range. Overall, the consolidation and rangebound trade, which we have seen for around one-and-half-month, is expected to continue in the coming week too.
On coming Monday, we will see the reaction on monthly industrial output data that slowed down to 4.3 percent (from 7.3 percent in November 2022).
The focus will mainly be on monthly inflation numbers by India and the US both of which might give some direction to the market.
Nifty 50- Index Daily chart
The Nifty 50 Index Daily chart is standing at a crucial point, where the 17800 level is now the most important level. The breach of this level can bring the benchmark index down to the 17300 level again, which was already became this month's low level so far.
Outlook for the Coming Week Starting from 13th Feb-2023
A few important things are playing out that one must not ignore.
India VIX - This volatility gauge has constantly fallen over the past week. INDIAVIX came off by yet another 11.48% to 12.74; the levels that were seen only in 2021.
This level is very near to the lowest levels seen in recent times. This reflects the complacency of the market participants and warrants caution as we approach the markets.
20-Week Moving Average: It currently stands at 17938. NIFTY50 Index took support on this Weekly Moving Average for the last 5 weeks in a row; following a violation of this level, the index is seen resisting this 20-Week Moving Average for the last two weeks. This has made the zone of 17900-18000 levels a strong resistance area for the index.
Support of the Week: We can see that the support is coming in at the 17600 level, but if this level breaks we are assuming that it can take the next support from 17480. And again, if it breaks down, then we can see 17300 as the major support, where the Nifty 50 index bounced back in previous weeks, with strong rejection at lower levels
Resistance of the Week: We can see the immediate resistance at 17962, If it breaks up decisively with good volumes, then we can see 18000 the round number will break easily and we can touch 18050 immediately. And if we can get FIIs institution support for buying in equities, then we can see the next resistance at 18190. We can touch the levels of 18300 to 18400 also if bulls continue with buying spree because this will give the nightmare to short sellers.
Considering the consolidation of the last few days within the range of 17,650-17,900 along with strong defense at 17,800, there are higher chances that the rangebound trade may break on the higher side than the downside,
Upside 17972 and downside 17350, is the major level, we need to watch for if the Nifty 50 Index breaks the five-week range. We need to prepare for either side.
Nifty has been slowly inching higher but is yet to show good momentum.
The VIX at one of its lowest levels remains a concern and given this fact, the markets need to be approached on a highly cautious note over the coming days.
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.