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Nifty - Truncated Week Range 23050 to 23680; Within Budget expectations, Profit taking on a higher level will continue

The previous week was exactly the opposite of the week before that as the

markets remained in an extremely narrow range before closing with modest

gains. The markets demonstrated a peculiar feature over the past five trading

sessions; on four out of Five trading days, the Nifty 50 came off by over 100

points from its peak every day.

However, the stark contrast was in the trading range that the markets displayed. In the previous week when the markets reacted to the elections, it swayed 2057 points. This week, the trading range contracted to just 283.75 points.

Post Market Weekly Analysis

The Nifty 50 weekly Index opened at 23319.15 touched the high level of 23490.40 and slipped down to 23206.65 before closing at 23465.60. So the benchmark index oscillated in a range of 283.75 points over the previous week's trading sessions, finally closing on a gain of 175.45 points, i.e. in percentage term (0.75%) on a week-on-week basis.

Nifty 50 Index Monthly Chart

Month-on-month basis, the Nifty monthly chart is still showing strength. It recovered from the lowest level of the week and closed near the top of the -time high level. It seems that the index will go higher from here but more or less, will come back on the same point to close near 23350 levels at the end of the month.

Nifty 50 Index Weekly Chart

The weekly chart has broken the channel and staying above the 9Week SMA is a good sign to move a little more higher side. Below 23200 could be a good support and buy on the dip level. and On higher side, the index is in unchartered territory, but it seems that 23680 could be a possible resistance level for the week.

Nifty 50 Index Daily Chart

On the day chart, it is visible that the index is getting resistance on each higher level.

Profit booking bouts continue, which capped the higher side. Below 23334 any day during the week will bring the index down to 23200 or 23050 levels.

Nifty 50 Weekly Fibonacci Chart Status

The Fibonacci levels insist that the index will travel between 1.272 level and 0.786 levels.

Nifty 50 Index Weekly Chart -with Technical Indicators

RSI Indicator Pattern

The weekly RSI is 68.25; it continues to show bearish divergence against the

price. While the prices are making new highs, the RSI is not. This has led to

the emergence of a bearish divergence.

Money Flow Indicator

This weekly indicator suggests bearish signals. Investors should wait for the index to come down before deciding to make their portfolio.

MACD Indicator Pattern with Bollinger Band

The weekly MACD has now shown a positive crossover; it is bullish and trades above the signal line.

FII's & DIIs Cash Weekly/Monthly Activities

Since the panic selling on June 4, when election results were below the Street expectations, FII selling has reduced on Dalal Street. NSDL data shows the net sell figure at Rs 3,063 crore through 14th June.

The resilience of the market and eagerness of retail investors to buy every dip in the market will force FPIs to reduce their selling which was sustained in May 2024. However, if the market continues to rally from here, FPIs may again turn sellers in India and buyers in other markets like Hong Kong which are very cheap compared to India

Outlook for the NIFTY 50 Index for the Coming Week

The coming week is a truncated week with Monday being a trading holiday on account of Bakri Eid.

The markets have closed at their fresh lifetime highs; however, they remain below the rising channel that was violated.

The Index is continuing to mark incremental highs but it is also continuing to resist the lower edge of the channel.

Analyzing the derivatives data, Nifty has strong resistance in the 23550-23600 zone; unless these levels are taken out convincingly, a sustained up move cannot be expected.

Over the coming shortened week, the Nifty may also rise a bit but at the same time, it stays vulnerable to profit-taking from higher levels.

India VIX:

Volatility continued to dramatically come down; last week it had come off by 31.38%, while this week, India VIX declined by another 24.05% to 12.82.

Support Level for the Coming Week for NIFTY:

The broader support level on the technical chart could be 23200, followed by 23050.

Resistance Level for the Coming Week for NIFTY:

The broader resistance level on the technical chart could be the level of 23550, followed by 23645-23680 levels.

Important Upcoming Monthly/Weekly Activities

Technical Analysis

It is expected that the 22,800-23,100 zone to provide support in case of profit-taking, and a decisive close above 23,600 could drive the index to a new milestone of 24,000.

The technical analysis of the Daily chart shows that while the Nifty is forming incremental lifetime highs, it is still not able to achieve a clean breakout.

The Nifty had violated a rising channel on the daily charts in April; now it is seen resisting the lower edge of the same channel in the form of an extended trendline. Given the rising nature of this trendline, it is opening up some room every day for the Nifty to form a new high but at the same time, it offers resistance as well to the Index. Unless there is a strong convincing move above the 23550—23600 zone, a clean breakout may continue to elude the markets.

Reading Current Option Data

The highest concentration of open interest on the Call side is at the deep OTM strike of 24,000.

Before that, significant accumulation is evident at the slightly OTM 23,500 call strike, which has served as a strong barrier all week.

This area will be closely monitored after the extended weekend, as a breakthrough above 23,500 could reinvigorate momentum in the current sluggish market conditions.

Conversely, the 23,400 put strike has the highest concentration of open interest, with notable buildup seen at the 23,300 put, indicating key support.

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 position as of the last trading day:

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

Summary - Overall

Overall, the markets are showing a lot of tentativeness at higher levels, however, there is no dispute about the fact that the underlying current remains strong. We may see some highly sector-specific shows playing out from the PSU/PSE space along with Energy stocks.

At the same time, some defensive plays from FMCG and Pharma cannot be ruled out as well.

It is recommended to keep leveraged exposures under control. The up moves from now on must be used to protect profits on the stocks that have run up too hard and effectively rotate the fresh buying in the stocks that are enjoying strong relative strength. A cautious outlook is advised over 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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