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Nifty - Now Ride the rally with strict stop loss; Caution: Resistance zone along with Consolidation zone ahead

As we have suggested the upward journey will continue, so it happened. The benchmark index Nifty 50 created a new all-time high again on Saturday trading and the market respects our analysis

Post Market Weekly Analysis

The Nifty 50 weekly Index opened at 22169.20 touched the high level of 22419.55 and slipped down to 21860.65 before closing at 22378.40. So the benchmark index oscillated in a range of 558.90 points over the previous week's trading sessions, finally closing with a gain of 165.70 points, i.e. in percentage term (+0.75%) on a week-on-week basis.

Nifty 50 Index Monthly Chart

The market has touched the level of 22419.55, in Saturday special session, and now till then the market is above the level of 22150, it is still in bullish zone. but on closing basis below 22050, market can show some weakness. The market in Long term is still in bullish zone.

Nifty 50 Index Weekly Chart

The Nifty 50 has extended its immediate support level to 22126, but if it breaks the next level of support would be 22050 and then level of 9-week SMA, which is placed at 21867. T

ill it is enjoying the levels above it, the Nifty 50 would be in bullish zone only.

Nifty 50 Index Daily Chart

The level of 22161 is the immediate support level on daily chart. Market is showing profit booking at the current level, but still the index is in bullish zone.

The market already re-entered in the immediate channel and it is respecting the lower level of channel, which is placed at 22260, Above this level, on closing basis. market can climb up to 22500 to 22700 zone.

Nifty 50 Weekly Fibonacci Chart Status

The immediate weekly resistance seems placed at 22600 and the immediate support seems at 21800. so the Fibonacci levels can be between 0.5 to 1.272.

Nifty 50 Index Weekly Chart -with Technical Indicators

RSI Indicator Pattern

The weekly RSI is 73.92; it remains in the mildly overbought zone but also stays neutral showing no divergence against the price

MoneyFlow Indicator

This weekly indicator is at 84.75 which is in its overbought zone. And it seems that it is looking for profit-taking bouts in the market from this level or a little higher levels.

MACD Indicator Pattern

The weekly MACD stays positive and remains above its signal line. However, the narrowing Histogram hints at a likely negative crossover over the coming days.

FII's & DIIs Cash Weekly and Monthly Activities

Foreign institutional investors (FIIs) during the week to the tune of Rs 1,089 crore despite US bond yields remaining elevated at around 4.2 percent. It is a general feeling that they may turn net sellers again in the coming days, though aggressive selling is unlikely.

In February, they net sold nearly Rs 16,000 crore worth of shares on top of nearly Rs 36,000 crore of selling in the previous month, while DIIs have remained net buyers since August.

Domestic institutional investors' buying is one of the key reasons for the market stability as well as at new historic high. They net bought Rs 4,585 crore worth of shares during the week and we expect the trend to continue in coming months too.

Outlook for the NIFTY 50 Index for the Coming Week

The market jumped to new highs on March 1, the first day of the new F&O series and helped the benchmark indices to close in the green for third consecutive week.

The bulls, however, are expected to keep the momentum strong in the coming week, though there is a possibility intermittent consolidation with focus on US Federal Reserve chairman Jerome Powell's testimony, monthly global services PMI numbers, US economic data and China's inflation.

"We expect ongoing momentum to continue while taking cues from a fresh set of economic data next wee. The release of additional data from the US such as PMI and payroll data and China's inflation data may influence market dynamics.

India VIX:

The previous week India VIX closed at 14.97. it touched a high of 16.74 and a low level of 13.53, It gained on a closing basis by -0.0200 (0.13%) on a week-on-week basis.

The volatility has crossed the 16 mark several times this year but hasn't sustained on weekly closing basis. If the index closes above the same level and sustains, then volatility may increase and may give discomfort to bulls. In the last three days of the week gone by, volatility cooled.

Support Level for the Coming Week for NIFTY:

The broader support level on the technical chart could be 22050, followed by 21850 levels.

Resistance Level for the Coming Week for NIFTY:

The broader resistance level on the technical chart could be the level of 22450, followed by 22650 levels.

Crude Oil

Crude oil rebounded and recouped the previous week's losses in the week gone by with healthy volumes but still seems like in the range with a strong hurdle at $84-84.50 on the higher side. Unless it decisively takes out this hurdle, consolidation may continue, adding immediate resistance is at $85-86 a barrel with support at $80.

Brent crude futures, the international oil benchmark, closed 3.4 percent higher at $83.55 a barrel during the week amid the Red Sea crisis and OPEC+ cuts.

"The upcoming OPEC+ meeting in March is now a focal point, with producers likely to maintain voluntary production limits, stabilizing the oil market.

Important Upcoming Weekly Activities

Fed chair Powell's testimony

Globally, investors will keep any eye on Jerome Powell's testimony due on March 6 and 7, when the the US Federal Reserve chair presents the semiannual monetary policy report

The US 10-year treasury yield remained above 4 percent, closing the week at 4.18 percent on March 1 against 4.25 percent in February 23. The dollar index dipped to 103.89 from 103.94 during the period.

Global economic data

The participants will also pay attention to monthly services PMI data, ECB interest rate decision, third estimates for Euro zone GDP numbers for Q3CY23 and China's inflation. The US jobs data, unemployment rate and factory orders will also be announced during the week.

Domestic Economic Data

On the domestic front, too, the HSBC Services PMI (Final) numbers for February will be released on March 5. As per the preliminary data, the India Services PMI jumped to 62 in February from 61.8 in January.

Bank loan & deposit growth for fortnight ended February 23, and foreign exchange reserves for week ended March 1 will also be announced during the week.

Technical Analysis

Technically, the Nifty 50 Index looked quite strong with continuation of higher highs formation for third consecutive week with positive bias in momentum indicators RSI (relative strength index) and MACD (moving average convergence divergence). With a decisive breakout of consolidation above 22,300, increase the expectation the Nifty to hit 22,500, the immediate resistance level, follow up 22750 with support at 22,200 in the coming week.

Reading Current Option Data

The options data indicates that the Nifty may hit 22,800-23,000 levels in the medium term but in the immediate term, it may face resistance at 22,500, with support at 22,200-22,000.

On the weekly options front, the 23,000 strike owned the maximum Call open interest, followed by 22,800 strike and 22,500 strike, with meaningful Call writing at 23,000 strike, then 22,800 strike and 22,400 strike, while the maximum Put open interest was seen at 22,000 strike, followed by 22,200 strike and 22,100 strike, with Put writing at 21,400 strike, then 22,400 & 21,700 strikes.

Participant Wise Final F&O Weekly Summary

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

1). FII's positions as of the last trading day:

2). PRO's positions as of the last trading day:

3). CLIENT's position as of the last trading day:

Summary - Overall

The current price action over the past few weeks shows that the momentum on the way up is decelerating and the markets are showing a lack of consensus among the market participants.

The widening Bollinger bands indicator also show volatility expansion over the past weeks. This bulge may lead to the trend slowing down and the markets entering into consolidation.

All in all, we are likely to see the markets inching higher, however, on week-on-

week terms, any runaway move may not happen. There are greater possibilities of the markets finding resistance at higher levels; it becomes important to lay equal or more emphasis on protecting profits at higher levels.

A cautious and selective approach is advised for the coming week.

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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