The benchmark index Nifty touched 19333.60 the lowest level in the previous week, but saved 19370 and was able to close above it. We highlighted the range in our previous technical journal, which was respected by the market.
Post Market Weekly Analysis
The Nifty 50 weekly Index opened at 19622.40 touched the high level of 19676.75, and slipped down to 19333.60 before closing at 19653.50. So the benchmark index oscillated in a range of 342.15 points over the previous five trading sessions, finally closing with a marginal loss of 15.20 points, i.e. in percentage term (0.08%) on a weekly basis.
Nifty 50 Index Monthly Chart
The monthly chart of the Nifty 50 Index, started on a positive note. However, comparatively, the volumes are not much to start with in comparison to the previous month. Well, it is too early to say about monthly data, because it has spent the first week only. The long wick on the weekly chart shows support from 20 Day Simple Moving Average
Nifty 50 Index Weekly Chart
The Nifty 50 Index on the last trading session of the previous week, on Friday, ended 108 points higher to form a Dragonfly Doji pattern on the weekly chart
A candle with a long lower shadow appeared; its occurrence near the support level of 20-week SMA adds credibility to this support level at least for the Ultra Short Term.
However, given the very small body, this candle can also be called a spinning top indicating the market participants' indecisive behavior.
No doubt, the ultra-short-term trend of the Nifty 50 Index has turned positive. But the overall positive chart pattern indicates the rangebound activity in an upcoming week between 19500 to 19800
Nifty 50 Weekly Fibonacci Chart Status
A long wick can give relief, which is showing good support from 19300 levels. But to close below the previous week's high, is something bothering seriously. this indicates the upside for the market is capped in the coming week. The candles can take resistance from the range of 0.5 to 0.38 levels. So the index can travel between 19750 to 19850 levels only.
Nifty 50 Index Weekly Chart -with Technical Indicators
Let us look at the weekly analysis with the help of important technical indicators.
RSI Indicator Pattern
The weekly RSI is 60.93; it stays neutral and does not show any divergence against the price.
This weekly indicator is at 53.31, which indicates a neutral and the daily indicator value is at 28.53 which indicates an oversold zone, which means ultra short term, the Index is in a bullish zone.
MACD Indicator Pattern
The weekly MACD has shown a negative crossover; it is now bearish and stays below its signal line. The first Weekly red histogram level is enough to show this after so many weeks.
Nifty 50 Index Daily Chart
On the Daily Chart, the Nifty 50 Index formed a bullish Doji candle. Technically, after a sharp fall, the Nifty took support near 19350 and bounced back sharply. Currently, the index is trading near the 50-day SMA (Simple Moving Average). As long as the index is trading above the 50-day SMA or 19575 level the positive sentiment is likely to continue.
Above the same, it could move up till 20-day SMA or 19800 and on further upside, the index may also continue to upsurge till 19850.
On the flip side, a fresh selloff is possible only after the dismissal of 19575, and below the same, the index could retest the level of 19450-19350.
FII's Cash Monthly and Weekly Activities
Every now and then, FII's are trying to push the Index down, and this indicates their weekly stocks selling in cash, as well as they have increased their Future OI from -65.3K to -84.4K
In the first week, of October, the FII's cash-selling figures in stocks soared to 8412 crores
The above figures are also spectacular from the previous month's cash selling data by FII's, which already crossed 55725.46, inclusive of this month.
Outlook for the NIFTY 50 Index for Coming Week starts from 25th September 2023
The previous week's Stock Market uptrend was supported majorly by falling oil prices, healthy domestic PMI data, and the Monetary Policy Committee's status quo in repo rate, but the RBI still sees inflation as a major risk and the tone was hawkish with the announcement of OMO (open market operations) sale to manage liquidity that on Friday lifted 10-year bond yield sharply. The significant FII outflow due to elevated US bond yields and the US dollar index capped gains.
What does OMO stand for?
Open market operations or OMOs are conducted by the Reserve Bank of India (RBI) by way of the sale and purchase of G-Secs (government securities) to and from the market with the objective of adjusting the rupee liquidity conditions in the market on a durable basis.
The Chart pattern analysis of the Nifty 50 Index shows that on the Daily chart, the Nifty index has managed to cross above the 50-DMA (Daily Moving Average) which is placed at 19607. Therefore, looking from a very short-term perspective, to avoid weakness, the Index should sustain above this point
On the weekly charts, the Index has rebounded off its 20-week MA (Moving Average) which is at 19324. This level is expected to act as a major support on a closing basis; if violated, it will invite incremental weakness for the markets.
Even if the technical pullback that was seen during the last two sessions extends itself, we will need to keep an eye on India VIX which has all the potential to not only infuse volatility on a large scale but also trigger violent profit-taking moves from higher levels.
The NIFTY tested and rebounded from the 20-Week MA; this level, which is placed at 19324 is now an important support on a closing basis.
The previous week India VIX closed at 10.30 from 11.45 Within five trading sessions, it touched the high of 12.40, It declined on a closing basis by -1. 1525 (-10.06%) on a weekly basis.
Yet another decline in INDIA VIX on a week-on-week basis is not a good sign. The India VIX is hovering near one of its lowest levels seen in its lifetime.
In a way that is not securely in position and is likely to fall or collapse the low levels of India VIX continue to keep the markets vulnerable to sharp moves even if the broader levels on the charts are not violated.
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 19320. levels.
Resistance Level for the Coming Week for NIFTY:
The broader resistance level on the technical chart could be 19780, followed by 19900 levels.
Reading Current Option Data
The Options data indicated that the Nifty may face strong resistance at 19,900-20,000 levels, with crucial support at 19,600-19,500 levels.
As per the weekly options data, the maximum Call open interest (OI) was at 20,000 levels followed by 20,500 & 19,900 strikes, with meaningful Call writing at 20,500 levels and then 20,000 & 19,900 strikes.
On the Put side, the maximum open interest was seen at 19,500 levels, followed by 19,600 & 19,000 levels, with writing at 19,600 levels, then 19,000 & 19,500 levels.
Meanwhile, the volatility cooled down considerably in the week gone by, giving more comfort to the bulls.
Important Upcoming Weekly Activities
The exchange will launch November, December, and January contracts for WTI crude oil on October 9 along with November and December natural gas contracts
CRUDE OIL Analysis:
The sharp fall in oil prices from more than a 10-month high is a positive for the Indian equity markets as India is the net oil importer.
Rising US bond yields and stronger dollar along with global demand concerns impacted oil prices during the week. International benchmark Brent crude futures corrected by 8.26 percent during the week, the biggest weekly loss since March 2023, to settle at $84.58 a barrel, continuing a downtrend for the third consecutive week from the high of $95.96 a barrel.
We should expect the crude oil price should consolidate in a lower-end range with a negative bias after a sharp selloff in prices.
Local and global Events to be considered
All in all, the markets may have rebounded from their weekly lows and also might extend their technical rebound at the beginning of the week, but the current technical picture suggests that we will need to stay extremely vigilant at higher levels.
The low levels of "India VIX" remain a concern, and there are all possibilities to see of volatility Spikes over the coming days and weeks
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 in the coming week, 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.