Updated: Oct 14
In the coming week, first of all, the week is truncated week. On account of the birthday of Mahatma Gandhi, we have market off on 2nd October., Monday.
Second, we need to see that the market is ready to take pause and will go into a consolidation phase, but before that, the reaction to the "US Shut Down", can make the market jittery.
Post Market Weekly Analysis
The Nifty 50 weekly Index opened at 19678.20 touched the high level of 19766, and slipped down to 19492.10 before closing at 19638.30. so the benchmark index oscillated in a range of 274 points over the previous five trading sessions, finally closing with a marginal loss of 35.95 points, i.e. in percentage term (-0.18%) on a weekly basis.
Nifty 50 Index Monthly Chart
As we discussed, the market has been rejected from the top of the channel, which was continued in the trading session of the previous week, but it was not so large. Now the 19223.65 is the major level to watch for. If the market breaks down this level with volumes on a closing basis, then it would be the first sign of trend reversal.
Nifty 50 Index Weekly Chart
The closing below the previous week's level is not a good sign for sure for the market for the coming week. If the market continues trading below 19500 for a long duration and is able to close below 19492 any day during the coming week, It will bring it down. to the first level of 19223.65, and then this could open the range of 18900 to 19000.
Volumes are slightly heavier than the previous week's volumes, but due to the drop in prices was not similar to the previous week's price trend, so the benchmark index closed in the Dozi candle, which indicates indecisiveness.
Nifty 50 Index Weekly Chart -with Technical Indicators
Let us have a look at the weekly analysis with the help of important indicators.
RSI Indicator Pattern
Looking at the weekly chart with the assistance of technical indicators, we can see that the weekly RSI is at 60.72 and not showing any against the Index price, through candlestick patterns.
MACD Indicator Pattern
The weekly MACD is bullish as of now but it is on the verge of showing a negative
crossover. A spinning top occurred on Candles; it reflects the indecisiveness
of the market participants.
This indicator is at 59.62, which, indicates a neutral bias but in weekly trading sessions, it does not show any great bullish pattern so far.
Nifty 50 Weekly Fibonacci Chart Status
Due to closing with the Dozi candle, we could be able to close above 19600 levels, but it seems that there is more downside left, which could drag, the index to 19400 and 19200 levels easily. On the higher side, 19700-19850 levels could be a strong resistance for the coming week.
Nifty 50 Index Daily Chart
This week, the market trapped both bulls and bears option traders and was able to hit stop-losses from both sides. The last trading day market tried to go back to regain its weekly high but got a rejection from the higher levels again, and shed off all gains. the volumes could not able to match with the previous day's selling volumes
FII's Cash Monthly and Weekly Activities
The whole week, maximum time, the index futures were trading at a discount, the reason was a clear signal that the FII's were increasing their selling positions in futures open interest. they increased it from -3.5k to -65.3k, which is a significant number and denotes that their short-term view is for the market is bearish only.
FII's net sold equities worth Rs 8430.77 crore, while domestic institutional investors net bought equities worth Rs 8143.28 crore. Cumulatively, FIIs net sold Rs 26,692.16 crore worth of equities in the month of September while DIIs net bought equities worth Rs 20,312.65 crore.
Outlook for the NIFTY 50 Index for Coming Week starts from 3rd October 2023
The technical analysis of the weekly chart shows a simplistic picture; while the daily chart has some technical events on it, the weekly chart just shows a continuation of retracement. If the current retracement continues, we may see the Nifty drifting towards the 20-week Moving Average which is placed at 19252 followed by the crucial pattern support of 19000 levels.
The previous week India VIX closed at 11.45 from 10.66 Within five trading sessions, it touched the high of 13.00, It gained on a closing basis by 0.7925 (7.43%) on a weekly basis.
Support Level for the Coming Week for NIFTY:
The broader support level on the technical chart could be in the range of 19500 followed by the level of 19370. levels.
Resistance Level for the Coming Week for NIFTY:
The broader resistance level on the technical chart could be 19790, followed by 19850 levels.
Impact of US Dollar Index:
Going ahead, it will be key to monitor this trend in the backdrop of easing the dollar index. The dollar index eased below 106 on September 29, after data showed that the core PCE price index rose by less than expected. A weaker dollar index has usually coincided with an increase in foreign inflows within emerging markets like India.
Reading Current Option Data:
The Options data suggested that the 19800 mark on the Nifty 50 Index is expected to be crucial for the higher side, whereas 19000-19500 is likely to remain critical for further downside if any.
On the weekly Options front, the maximum Call open interest was seen at 19800 strikes, followed by 19700 & 20200 strikes, with meaningful Call writing at 19800 strikes, then 20200 & 20100 strikes.
The maximum Put open interest was visible at a 19600 strike, followed by a 19500 strike, with Put writing at a similar strike in the same sequence.
"Strong Put writing was observed at 19500 & 19600 strikes which led to the up move in Nifty on Friday. The 19500 level on the downside and the 19800 level on the upside are the two key levels to track in Nifty.
A decisive break on either side will provide cues about the future direction in the index.
Local and global Events to be considered
RBI policy Analysis
The Reserve Bank is likely to maintain the status quo on policy rates for the fourth time in a row as retail inflation continues to remain high and the US Federal Reserve has decided to keep a hawkish stance for some more time.
The Reserve Bank raised the benchmark repo rate to 6.5 percent on February 8, 2023, and since then it has retained the rates at the same level. The Reserve Bank Governor-headed six-member Monetary Policy Committee (MPC) meeting is scheduled for October 4-6, 2023.
All in all, there are greater chances of the technical structure getting defensive in the markets. While we may see some catchup being attempted by Banknifty in the event of any technical rebound happening,
It is strongly recommended that leveraged exposures should be kept at modest levels; excess leverage should be avoided.
Keeping in mind that volatility may increase sporadically and intermittently, a defensive and cautious outlook is advised for the coming week.
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.