Updated: Mar 13
On Wednesday, March 8, 2023, the funds run by leading VC Peter Thiel had asked to withdraw funds from SVB. This spread like wildfire and depositors started to withdraw their funds. The bank said it had ample liquidity to manage the balance sheet and there were no concerns. However, these assurances did not assuage the depositors. By Friday, 10th March, the bank was declared bankrupt. In just two days, a US bank had failed.
The bank opened offices across the world in this period: Israel, China, Ireland, Germany, Canada, Denmark, and so on. It also opened an office in Bengaluru. It featured on Forbes’ list of best US banks for the last five years, including the last such list released just three days before the bank tanked.
What is the Impact on the Indian financial Market?
As India is a more consumption-oriented economy, the impact may be muted, but there will be some impact. If the financial markets in the West continue to decline and there is a recession, it will impact Indian financial markets as well and result in lower growth rates in India.
Let us discuss the Nitry Index chart in different time frames
Nifty 50 Index Monthy Chart
Somehow, the Nifty 50 Monthly Index Chart was able to close above 17400, but it seems that relentless selling by FIIs is still on. (the data will tell you that FIIs are net buyers, but you need to minus the block deal in Adani Stocks, to know the final figure, which is still negative)
The monthly close below 17255 any time in this month, will invite the bears to make the market down up to the 17000 mark, which is a phycological level, before being dragged down to 16747.
Nifty 50 Index Weekly Chart
If a downward blow sustains above 17180, only then we can see that the Nifty -50 Index can see, once again the mark of 17500 to 17700 level regained.
The previous week, it almost touched the 50 daily moving average, which is at 17350, before recovering from 17324 to the 17400 level and finally being able to close at 17412.
Nifty 50 Index Daily Chart
The Nifty 50 Index Daily chart is showing a scary picture. Candles were able to break all three important daily moving averages, before getting rejection from below levels.
If once again, it will try to breach the low level of the daily candle, which stands at 17324, it will try to touch 17180, and this will be followed by an invitation of more downfall.
Outlook for Coming Week starts from 13th March -2023
The Nifty 50 Index is now very near to the support zone, where it has created a point where two moving averages are resting at one sport. The 50 Weeks Moving Average is presently at 17350. This is expected to act as a strong support for the index. Apart from this, the 200-Daily Moving Average stands at 17434. This makes the 17255-17434 a strong support zone for the NIFTY. Over the coming week, it would be extremely important for the NIFTY to defend this 179-point zone and not violate it on a closing basis.
Support Level for the Coming Week for NIFTY:
We can see the support coming from the level of 17300 and it breaks decisively, then 17255, is the most important support. Followed by 17180 is the last hope for support, breaking which we can see the index can be dragged down to 17000.
Resistance Level for the Coming Week for NIFTY:
We can see the resistance level could be 17580, followed by 17600 and If it will be broken up, then we can see the level of 17700 at most the highest level in this weak.
The fear index increased sharply by more than 10% during the last week to 13.41 levels, up from 12.18 levels, making the bulls a bit uncomfortable. If the volatility increases further, then there could be some instability in the market.
After collecting the derivative data, the put call ratio has dropped to 0.89 and the Index Future short position by FIIs has once again increased to 84 percent, which is reviving the possibility of a short covering rebound.
But, for any significant short-covering move, the market needs a piece of strong bullish news to head up
.We will see volatility staying ingrained into the markets. It is also expected that no one sector will dominate the space; the markets are likely to stay highly selective
It would be wise to continue staying invested in low-beta stocks. Also, prudence would be to keep leveraged exposures at modest levels.
Even if there are greater possibilities of resumption of an uptrend, we will advise a cautiously positive approach.
Thanks for reading.
Neeraj Bhatia (Managing Director)
Disclaimer: I am not a SEBI Registered technical Analyst, so consult your financial advisor, before taking any trade. This technical post is only for learning purposes.