There are 6 market points, why Stock Market is falling?
US Treasury Yield nearly 5% - After reaching a 16 yrs high
Israel - Hamas War - Middle East Tension increase uncertainty
Participatory Selling -Heavy sell-off
Rising US Dollar - Surpassing the key level 106 against INR -Good for Profit Taking
FIIs Selling - Reallocating Funds to Gold, Bond and Currencies
Rising Inflation - The main reason is High Crude Oil Prices due to Middle East Tension
Post Market Weekly Analysis
The Nifty 50 weekly Index opened at 19521.60 touched the high level of 19556.85 and slipped down to 18837.85 before closing at 19047.25. So the benchmark index oscillated in a range of 719 points over the previous week's trading sessions, finally closing with a loss of -495.40 points, i.e. in percentage term (2.53%) on a weekly basis.
Nifty 50 Index Monthly Chart
We have seen that the market slipped heavily approximately 500 points, downward, before recovering a little bit. But this seems like a fake breakout. The reason behind this is that the index has already broken important support and closed below the previous month's low levels. So after a little more upside, once again downside can not be ruled out.
We have only two positive points, first, the current month's volume is less than the previous month's volume. But we can not deny that, the Index can take one more dip, because, it seems the first leg of selling is done, and on Friday, a little bounce back towards 19000 is not a trend changer, it is just a relief rally and short coverings.
The second point is, that the index has taken support from a 9-month Simple Moving Average and closed with the dozi candle, which indicates indecisiveness among traders and investors.
Nifty 50 Index Weekly Chart
The weekly chart is quite a disturbing pattern, it has already closed below 9 weeks SMA and 20 Week SMA. It reversed from close to a 50-week SMA, which indicates it can drift down to 18500 levels where it can take support from a 50-week SMA.
It reversed from 18837, but technically, the weekly index will be bearish, till it will not give any closing above 19315.
Nifty 50 Weekly Fibonacci Chart Status
The weekly chart has touched its maximum low point and got rejected. The closing of the candle is between 0.236 and 0, which is still a bearish grip. The index can try to recover a little more and can touch the 0.236 level and will try to touch the 0.382 level, which seems difficult at present, before drifting down again below the 0 levels in the coming days.
Nifty 50 Index Daily Chart
For the time being, for the ultra short term, we can say that the Daily Index Chart found its immediate support at 18850 and was able to close above 19000 and also try to bounce from its lower levels to the next resistance level of 19230.
It is also trying to enter again, in the channel. It would be interesting to see, if the market enters again in the channel, or gets resistance and drifts down further.
Nifty 50 Daily Fibonacci Chart Status
The Daily Chart of Fibonacci suggests that the index found its immediate support and will try to bounce back towards the 0.236 level. The candles are forming lower highs, which indicates the more downtrend is left for the index.
Nifty 50 Index Weekly Chart -with Technical Indicators
RSI Indicator Pattern
The weekly RSI is 48.17; it remains neutral and does not show any divergence against the price.
This weekly indicator is at 41.29, which indicates bearishness. Smart money is still having a large chunk of Option Interest short in Future Index.
MACD Indicator Pattern
The weekly MACD is bearish; the continuous widening Histogram shows accelerated momentum on the downside. And this is happening from previous 3 weeks.
FII's Cash Weekly Activities
One of the major issues hammering the indices down by FIIs sell-off, remained high last week, with more than Rs.13000 crore flying out of the Indian equities.
It seems that the FII flow is unlikely to come back, unless the volatility related to geopolitical tensions reduces, US bond yield eases and valuation becomes attractive.
On the other side, DIIs have managed to offset the FII outflow to a major extent by buying Rs.11550 crore worth of stocks during the week and Rs.23400 crore in current month.
FII's Cash Monthly Activities
In October, the total selling was almost equal to September at Rs.26600 crore. This is attributed to elevated US bond yields, Israel-Hamas war-led uncertainty in West Asia, and mixed September-quarter earnings.
Outlook for the NIFTY 50 Index for Coming Week
A tweezer is a technical analysis pattern, commonly involving two candlesticks, that can signify either a market top or bottom.
A bearish Tweezer Top kind of candlestick pattern formation in previous week, followed by long bearish candlestick pattern with lower shadow on the weekly charts last week still indicates the bears may remain in the leading position, with critical support at 18800 (the last week's low) as breaking of the same can drag it down to 18600-18500 levels, whereas 19200-19300 may act as a crucial hurdle on the higher side, followed by 19500.
The previous week India VIX closed at 10.90 from 10.81 Within five trading sessions, it touched a high of 12.30 and a low level of 10.67, It lost on a closing basis by
-0.8250 (-7.03%) on a weekly basis.
Even though the market has seen sharp correction in the past week, the volatility has not changed much. In fact, the India VIX has been in the range of 9-13 levels for several months now.
If we break below 18500 it will be then the fear factor will kick in and we can start seeing sharp rise in VIX index. Market is currently not expecting major correction thereby keeping the VIX in a range.
Support Level for the Coming Week for NIFTY:
The broader support level on the technical chart could be in the range of 19200 followed by the level of 19350. levels.
Resistance Level for the Coming Week for NIFTY:
The broader resistance level on the technical chart could be 18800, followed by 18710 levels.
It seems that Oil prices continued to be rangebound and remained below $95 a barrel during the current month as the war has not hit the oil supplies yet. Oil prices were also supported by strong US economic data.
Our expectation regarding crude oil prices is to remain volatile for the day and will command risk premiums from the prevailing geopolitical concerns in the Middle East. The Brent crude futures fell 1.82% (percent) during the last week, to end at $90.48 a barrel.
The pattern analysis shows that NIFTY has achieved a classical throwback by retesting the original breakout zone of 18800-18900. The level of 18600 was tested in October 2021, then the Nifty 50 Index made an incremental high of 18887 in December 2022.
The breakout led to the Index forming a new lifetime high of 20195. The recent correction has seen the Index retesting its original breakout zone.
On upside, 19550 is major hurdle and immediate support is at 18800 levels. Below this we can expect prices to retest 18550 levels.
In a nutshell, we can see rangebound movement before meaningful recovery is seen.
Also just one day of pullback is not sufficient.
We need to closely observe if weekly closing by end of next week can show any sustainable recovery or the rally gets sold into. We are cautious over two to three weeks but bullish from medium to long term perspective.
Reading Current Option Data
The Options data also indicated that 19200 is expected to be key immediate resistance, followed by 19500-19600, whereas on the lower side, 19000-18800 will be broad support area for the Nifty 50 Index in coming days.
On the Call side, the maximum open interest was seen at 19200 strike, followed by 19500 strike, with writing at 19200 strike, then 19600 and 19500 strikes,
On the Put side, the maximum open interest was visible at 19000 strike, followed by 18800 and 18900 strikes, with writing at 19000 strike, then 18900 and 18800 strikes.
Important Upcoming Weekly Activities
Corporate earnings will be the biggest market determinant next week, too, as nearly 700 companies are likely to release their results
Summary - Overall
All in all, there are possibilities In any case, the upsides are likely to stay capped or they may remain measured and limited in their extent. In the current technical setup, it would be prudent to increase exposure in the large-cap and remain highly selective while dealing with the broader markets.
Going down the line, looking at the improving relative momentum of the Nifty 50 Index against the broader markets, it is likely that the frontline indices better their performance against the broader markets.
Ongoing unrest in West Asia and concerns over the potential impacts of higher interest rates on future economic growth have resulted in a decline in investor confidence.
However, the volatility of the global market is expected to delay the recovery trend of the domestic market, since the global market is focused on the risk of further slowdown of the global economy due to elevated interest rate and geo-political tension.
A highly cautious outlook is advised while keeping a vigil eye of the Nifty 50 Index price behavior vis-à-vis the levels of 18850-18900, which would be crucial this time.
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.