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Nifty - Rejection from High; Weekly Range 21300 to 21800; Breaks on either side could invite Volatile Spikes.

The Nifty saw a sharp fall in the week gone by with the market falling close to 1.5%. to end at 21,572. The frontline indices were dragged by HDFC Bank when the heaviest-weight constituent failed to impress the Street with Q3 numbers. Among sectoral indices, Nifty Bank fell close to 3.5 percent as the Street was not happy with HDFC Bank's net interest margins (NIM) numbers.

Post Market Weekly Analysis

The Nifty 50 weekly Index opened at 22053.15 touched the high level of 22124.15 and slipped down to 21285.55 before closing at 21571.80. So the benchmark index oscillated in a range of 838.60 points over the previous week's trading sessions, finally closing with a loss of 322.75 points, i.e. in percentage term (-1.47%) on a week-on-week basis.

Nifty 50 Index Monthly Chart

After touching a new all-time high, once again we have seen the profit taking from the high level. Somehow it seems we are making new highs, but FIIs are ready to book profit at higher levels, and they have started making shorts in future positions. It seems that the upside is very limited from here and we will not be able to sustain in the range of 22000 to 22500 levels.

Nifty 50 Index Weekly Chart

A very huge negative volume candle suggests that FIIs selling in cash delivery was real, it may be possible that they have redemption pressure from global clients, because of deteriorating economic conditions. We found that a bearish engulfing candle is a negative candle and if we get a follow-up candle in the coming week, it could drag the market up to 21200 levels, which is a 9W-Simple Moving Average

Nifty 50 Index Daily Chart

The last four candles struggled to come back into the channel, but it seems that the previous three candles surrendered on Friday the last trading session. On a daily chart, candles started closing below 9D-SMA and 20D-SMA, which is a sign of bearishness and if it closes below 21295, then the candle will try to touch 50-SMA on a closing basis, which is sitting at 20910 as of now.

Nifty 50 Weekly Fibonacci Chart Status

The Fibonacci chart touched exactly 0.786 and then got rejected from a low level, but in the coming week, if any time on a closing basis, the market breaks the 0.786 level, then it can go down further.

Nifty 50 Index Weekly Chart -with Technical Indicators

RSI Indicator Pattern

The weekly RSI stands at 70.16; it remains mildly overbought. The RSI stays neutral with negative bias without showing any divergence against the price

MoneyFlow Indicator

This weekly indicator is at 77.77, which seems in the overbought zone. And it can be considered on the higher side, which gives the signal of consolidation or correction ahead.

MACD Indicator Pattern

The weekly MACD is bearish and remains below its signal line. A sign of bearishness is visible.

FII's & DIIs Cash Monthly Activities

Foreign institutional investors (FIIs) turned massive sellers in the cash market having sold equity worth Rs 24147 crore in three days from 17th through 19th January.

There are two reasons why FPIs turned sellers

First, the US bond yield started rising with the 10-year yield rising from the recent level of 3.9 percent to 4.15 percent triggering capital outflows from emerging markets like India, Taiwan, South Korea, and Hong Kong.

Second, since the valuations in India are high, FPIs used the excuse of less-than-expected results from HDFC Bank to press massive sales. FPIs increased their short positions, too


Going ahead, it has to be monitored if this trend intensifies.


Previous Week's FII positions in Options & futures and Cash Segment

Outlook for the NIFTY 50 Index for the Coming Week

In the coming holiday-shortened week, the interest rate decisions of the BoJ and ECB, along with US GDP data, more quarterly numbers announcements, and pre-budget sentiment are anticipated to drive the market dynamics.

India VIX:

The previous week India VIX closed at 13.08 from 13.10 Within five trading sessions, it touched a high of 14.24 and a low level of 13.09, It lost on a closing basis by

-.0750 (-0.54%) on a week-on-week basis.

Support Level for the Coming Week for NIFTY:

The broader support level on the technical chart could be in the range of 21456 followed by 21285 levels.

Resistance Level for the Coming Week for NIFTY:

The broader resistance level on the technical chart could be 21928, followed by 22124 levels.

Important Upcoming Weekly Activities

Pre-Budget mood

Like last year, this year too the Street expects a big bang public capex announcement. The excitement is visible in railway and power stocks that rallied to new highs amid heavy trading volumes in the week gone by.

However, foreign broking firm Jefferies foresees a potential slowdown in government capex growth, possibly below 10 percent, due to fiscal consolidation. This could disappoint the market, leading to corrections in stocks exposed to government capex programs.

Technical Analysis

For the Nifty, the support lies at the 21,300-21,400 zone, a break of the support can bring more selling pressure. The 21,750-21,850 zone is expected to be a key hurdle on the higher side. While maximum option writing stands at 21,500 and 21,800.

Shifting focus to Bank Nifty, a crucial support level lies at 45,000 with the possibility of the price remaining sideways in the range of 45,000 to 47,000. While hurdles are placed at 46,500 to 47,000.

A breach may trigger selling pressure, potentially leading to a downside

Reading Current Option Data

On the weekly options front, the 22,500 strikes owned the maximum Call open interest, followed by 22,000 strikes, and 21,700 strikes, with meaningful Call writing at 21,700 strikes, then 22,400 strikes, and 21,900 strikes,

On the Put side, the maximum open interest was seen at 20,500 strikes, followed by 21,000 strikes and 21,500 strikes, with writing at 21,000 strikes, then 21,100 strikes.

The above options data indicated that 21,700 is likely to be immediate resistance for the Nifty 50 holding which can drive the index towards the 21,900-22,000 area, while the immediate support may be 21,500 and the crucial support at the 21,000 mark.

The option activity at the 21,500 strike will provide cues about Nifty’s direction in the coming days. If Put writers exit from the 21,500 strike, the fall can extend further until 21,000 levels

Participant Wise Final F&O Weekly Summary

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

FII's positions as of the last trading day:

PRO's positions as of the last trading day:

CLIENT's position as of the last trading day:

Summary - Overall

In the coming truncated week, the interest rate decisions of the BoJ and ECB, along with US GDP data, more quarterly numbers announcements, and pre-budget sentiment are anticipated to drive the market dynamics.

New purchases must be kept defensive; it is expected that sectors like FMCG, Pharma, etc., may do well going ahead from here. While keeping leveraged exposures under control, a highly selective approach is advised for the day

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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