As suggested in our previous technical journal; The Nifty 50 Index touched a new all-time high but higher India VIX forced traders to book the profit and pulled the index down. The big fall was rescued by FPI inflows, which crossed 4800 cr in the first week of January 2024.
Post Market Weekly Analysis
The Nifty 50 weekly Index opened at 21727.75 touched the high level of 21834.35 and slipped down to 21500.35 before closing at 21710.80. So the benchmark index oscillated in a range of 334 points over the previous week's trading sessions, finally closing with a loss of 20.60 points, i.e. in percentage term (-0.09%) on a week-on-week basis.
Nifty 50 Index Monthly Chart
The formation of a dozi candle implies that the index is taking a breather, before moving either side. Traders are not comfortable in either buying at this level or selling at this level. For sure, we are not still bearish on the market because the longer term of the index is still bullish.
Nifty 50 Index Weekly Chart
The weekly chart suggested that the short-term uptrend status of Nifty remains intact, but the market is likely to find resistance around 21800-21850 levels in the coming sessions.
A decisive move only above 21850-21900 levels could open the next upside target of 22200 levels. Any dips from here could find support around 21500.
Nifty 50 Index Daily Chart
The Nifty Index on Friday ended 52 points higher to form a Doji candle on the daily chart. A sharp negative implication can't be expected as the pattern has been formed amidst range-bound movement. Somewhat profit-taking in between trading sessions could be a healthy sign for the market to move forward.
Nifty 50 Weekly Fibonacci Chart Status
This level is taking a breather as a cooling down of the Indix VIX was forced to bring profit bouts. If the market surpasses 21834, again, it may be possible we can reach 22200, immediately. Later we can also touch the 1.272 level, but it seems that will take time for a while.
Nifty 50 Index Weekly Chart -with Technical Indicators
RSI Indicator Pattern
The weekly RSI is 75.86 While it has marked a new 14-period high and stays overbought, it also remains neutral while not showing any divergence against the price.
MoneyFlow Indicator
This weekly indicator is at 83.49, which seems a very limited upside. And it can be considered on the higher side, which gives the signal of consolidation or correction ahead.
MACD Indicator Pattern
The weekly MACD stays bullish and remains above its signal line.
FII's Cash Monthly Activities
In December, FPIs were big buyers in financial services and also in IT. FPIs also bought in sectors like autos, capital goods, oil and gas, and telecom.
Since 2024 is expected to witness further declines in U.S. interest rates, FPIs are likely to increase their purchases in 2024 too, particularly in the early months of 2024 in the run-up to the general elections,
Previous Week's FII positions in Options & futures and Cash Segment
In the first trading week of the year, foreign institutional investors were buyers while domestic counterparts were sellers. FIIs bought equities worth Rs 3290.23 crore in the week gone by while DIIs sold Rs 7296.50 crore.
FII inflow follows the trend of the last two months of 2023, as foreign investors made a return thanks to the sharp decline in US bond yields and the declining dollar.
Outlook for the NIFTY 50 Index for the Coming Week
After a flat close for markets in the week gone by, a slew of important factors including the start of Q3 earnings season, inflation numbers, and stock-specific triggers are set to dictate the mood in the new trading week.
Amid this, investors will see Nifty's move towards the 22000 mark after hitting a new high of 21834.
India VIX:
The previous week India VIX closed at 12.63 from 14.50 Within five trading sessions, it touched a high of 15.08 and a low level of 2.48, It lost on a closing basis by
-1.8725 (12.91%) 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 21500 followed by 21329 levels.
Resistance Level for the Coming Week for NIFTY:
The broader resistance level on the technical chart could be 21850-21900, followed by 22000 levels.
Crude Oil
Both Brent and WTI ended the first week of the year higher. WTI rose 3 percent for the week, to $73.81 per barrel. Meanwhile, Brent futures gained 2.2 percent to settle at $78.76 a barrel.
With the tensions in the Middle East, the geopolitical trading premium has to get pushed higher.
Important Upcoming Weekly Activities
According to the BSE earnings calendar, about 65 companies are slated to release their results between Jan 8 to Jan 13. Among Nifty 50 companies, TCS (Jan 11), Infosys (Jan 11), HCL Tech (Jan 12), Wipro (Jan 12) and HDFC Life Insurance (Jan 12) will declare their December results.
US Inflation Numbers and Global Economic Data
US CPI (consumer price index) will be released on Jan 11 by the Bureau of Labor Statistics. Headline CPI is estimated to rise 0.3 percent month-on-month for December. As per reports, a similar monthly increase of 0.33 percent is expected for core CPI, which removes changes in food and energy prices.
Red Sea Crisis
The crisis is not showing any signs of abating, with Houthi rebels continuing to attack commercial ships in the Red Sea as the Israel-Hamas conflict deepens.
The increasing Red Sea crisis may impact trade as it is expected to push shipping costs by up to 60 percent and insurance premiums by 20 percent
Domestic Economic Data Points
On the domestic front, CPI inflation for December scheduled to be released on January 12 will be closely watched. Most experts expect the inflation to increase by around 10-20 bps from 5.5 percent reported in November due to a likely increase in food inflation but see core inflation moderating further a bit from 4.05 percent in November.
Apart from CPI, industrial production data for November, foreign exchange reserves (for the week ended January 5), and bank loan & deposit growth (for the fortnight ended December 29) will also be released on January 12.
Technical Analysis
On the charts, the Nifty 50 Index is forming new higher highs daily, with identified support levels at 21500 and 21400. Immediate resistance is anticipated at 21800 and 21900, if Nifty manages to sustain above the 21800 mark, then 22000 and 22200 will be the next target levels.
Reading Current Option Data
Options data indicated that the 21800 is expected to be an immediate resistance for the Nifty 50 as clearance of the same may take the index beyond the 22000 mark. At the same time, the 21700-21500 is the crucial support area.
On the options front, 22500 strikes owned the maximum Call open interest, followed by 23000 strikes and 21800 strikes, with meaningful Call writing at similar strikes in a similar sequence,
While on the Put side, the maximum open interest was visible at 21000 strikes, followed by 21500 strikes, and 21700 strikes, with meaningful writing at 21700 strikes, then 21000 strikes & 21500 strikes.
Meanwhile, the volatility dropped sharply during the last week, after consistently rising for the previous five weeks, making the trend favorable for bulls.
Participant Wise Final F&O Weekly Summary
FII's, PRO, and Clients F&O Summary by Segment
FII
PRO
CLIENT
Summary - Overall
All in All, the previous week's market, made again one more lifetime high, but higher India VIX forced traders to book profit on higher levels. Even FPIs bought a large number of stocks in the cash segment even then market could not able to sustain them on higher levels. Now unless the previous high point of 21834 is decisively taken out, the markets may have put a temporary top in place for themselves. Even if the markets attempt to post incremental highs, it has created a stiff resistance zone in the 21850-21900 zone. It would be difficult for the markets to move past 22000 levels soon and sustain above that, contrary if it could happen, then the next level for the market would be 22200.
The best way to navigate such overheated markets would be to keep leveraged exposures at modest levels and stock to only those stocks that show strong or at least improving relative strength. It is strongly recommended that one must now turn to traditionally defensive pockets like Pharma, FMCG, etc while making fresh purchases.
A highly selective and stock-specific approach is advised for the coming week.
Thanks for reading.
Keep Trading
Stay Invested
Regards,
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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