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Nifty - Weekly closing above 18600 to boost sentiment

A pause to rate hike from RBI, India, turned a non-event to cut no ice among bullish traders and bears took advantage of it and brought the market in their direction easily.

Nifty oscillated in the range of 246.30 points, opened at 18612, touched a high of 18777.90, dragged down to 18531.60, and closed at 18563.40 with a nominal gain of 29.30 (+0.16%)

When everyone was thinking that the index is just near to touching the all-time high at 18887.60, hardly 109.70 points far away, the low India VIX, forced traders to book the profit on top of the market. Will it be a coincidence or a bear trap for Put option sellers by big players?

Let us discuss, what the technical chart suggesting us for the coming week

Nifty 50 Index Hourly Chart

The hourly chart of the Nifty 50 index is a little bit more deteriorating compare to the daily chart because it breaks the level of the 50 Simple Moving Average (sitting at 18601.80) and trying to take support near the 100 Simple Moving Average trendline, which is sitting at 18525.40. Its lowest weekly level was 18531.60, which was above the previous weekly low of 18464.55.

Nifty 50 Index Daily Chart

The daily chart of the Nifty 50 is supported by all simple moving averages so far. It is very much in the upward channel. Even the previous two trading sessions were drifting the index down, but this only seems due to profit booking bouts and it was anticipated after the RBI Interest Rate event.

Well, after the formation of continuous two full-bodied bearish red candles, we can say, from the trader's point of view, the market needs to regain the level of range of 18650 to 18750 as soon as possible to stay above the 18500 level.

Nifty 50 Weekly Chart (Fibonacci Chart Status)

We are following this structure for a quite while, and as we discussed the previous week, it can try to go further towards the 100% mark, which it tried well, but later came down, even though, it is still not got knock off by previous week low level. In the coming week, if it respected its low level, created this week, only then, it will again try to march forward. It can take support again from 18446 levels, which is 78.6% level in the Fibonacci structure.

Nifty 50 Index Weekly Chart

The Nifty 50 Index weekly chart is still being supported by all simple moving averages and it seems it will be well supported for the coming week also. The weekly candle, which is formed by a Long upper shadow/wick, which shows a strong falling pressure, is a bearish candle pattern, supported by the daily chart pattern with the last two previous trading sessions. But if the market will able to regain the 18650 level soon, it will force call writers to book their profit or to cut their losses.

Nifty 50 Index Monthly Chart

The Nifty 50 index Monthly Chart is still not showing any significant downward moves. All simple moving averages are supporting comfortably and Chart itself is still in the bullish channel so far. The low level of the bullish channel is 18243, till it is trading above this level, it is going to form a new 3 green candle pattern including this month's candle pattern.

FIIs Weekly Activities:

The FIIs weekly activities are quite interesting, On one side they are maintaining their bullish view in the long term by buying in the cash market, and on another side in the short term, they are enjoying the ride of the downside by increasing their short position in Index Future.

FIIs 3 Months Activities

We can see the proof in the monthly numbers of buying activities in the cash market by FIIs.

Fortnightly Option Interest Data

If we look immediate reaction of Option Interest Data, it seems to be 50-50, which means the Put Call ratio reached 50% each on 9th June 2023. So it means if call writers will be forced to close their open positions, only then, we can see upward movements in the market.

Outlook for the NIFTY 50 Index for Coming Week starts from 12th Jun 2023

RBI Policy in points - Have a look

Before bulls can start enjoying the news, bears took the position upfront and drag the market quite low. As per option data, call writers are sitting on a big profit on call writing levels on the 18800, 18700, and 18600.

On Monday, if the market opens Gap Up, then they will again try to sell 18600 and 18500 levels, but any sentiment boost up news can force them to cover their short positions and the market can again regain 18600 to 18650 levels soon. Above 18650, the market can reach the 18750 level and should stay at this level, which would be a great session for traders to pave the way to try to reach an all-time high one more time.

Any slippage below the 18,600 level will push the markets under some prolonged consolidation once again.

India VIX

The previous week India VIX closed at 11.12 from 11.12. (No change)

Support Level for the Coming Week for NIFTY:

The broader support level on the technical chart could be the range of 18465-18480 followed by the range of 18365 to 18300

Resistance Level for the Coming Week for NIFTY:

The broader resistance level on the technical chart could be in the range of 18660-18680 followed by the range of 18780-18885.

Flows into Equity Mutual Funds Fall to A 6-Month Low in May

Investors, however, continued to pour money into schemes through the monthly systematic investment plans (SIPs) with collections soaring to an all-time high of Rs. 14,749 crore compared to Rs. 13,728 crore in April.

Stock Market is a high-probability setup. Maximum times, a piece of Good news is No News in the market, and sometimes No News is a piece of good news in the market. In RBI policy, it becomes the same that good news turned into a non-event and if buying is absent, then bears encash the opportunities.

This week, we need to be careful, to see, if the market can hold the 18600 level in the weekly closing. if it is successful, only then we can expect some fireworks upside.

Till then, keep yourself stock specific and be vigilant.

Thanks for reading.

Keep Trading

Stay Invested


Neeraj Bhatia

(Managing Director)

Disclaimer: I am not a SEBI Registered technical Analyst, so consult your financial advisor, before taking any trade. This technical weekly post is only for learning purposes and its a free of charge. The views written here are completely my personal view only. I am not suggesting here anyone to follow my views. I do not have any WhatsApp Group ID or Telegram ID related to it.

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