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Nifty - Wide Range Consolidation from 17800 to 18490

The benchmark index moved higher from 18389 levels to 18458.90 levels, which was a move of very quickly 69 points, and then the market changed the swing downward and moved down from 18194 levels to 18060.40 levels, which ranged from 133 points, before weekly closing again only on 18203.40.

So the trading range between swing and forth in the previous week in the Nifty 50 index was 398 points, which is enough for an Options seller trader to grab quick earnings, both sides move.

The good point is Nifty resisted both side key levels in all of the previous week's sessions and the bad point is it closes with a net loss of 111.40 points which is (-0.61%) on a weekly basis.

Let us discuss what the Chart is suggesting to us for next week's trading opportunity

Nifty 50 Index Hourly Chart

In the Nifty 50 index hourly technical chart, is visible with both side's weekly movements in 5 trading day sessions, suggesting to us that maybe there are more sellers sitting on the upside than buyers on the lower side.

But the positive divergence on the hourly momentum indicator indicated the loss of momentum on the downside which in turn helped the up move.

Somehow, if the market breakdown ranges from 18040 to 17800 levels, then it can slip into a time and price consolidation zone for the mid-term, which could take a little longer time to recover than expected.

Nifty 50 Index Daily Chart

Till the daily chart is within the channel, it will protect the range of 18042, breaking down Below this level 18000 will not take long to break down and can drift 200 SMA immediately, which is sitting on 17800 levels at present.

Status of Nifty Fibonacci Chart on Weekly time frame:

As the chart suggested that it has already touched 7.86%, (as we discussed in our previous technical journal), in the previous week's trading session and got a strong rejection from the 18458.90 level. Now it seems difficult to move higher toward 1% levels without any meaningful correction or any boost up data flow.

Nifty 50 Index Weekly Chart

As we discussed previously, this resistance level has already tried to break out 9 times previously, with no success. This time also the market is hovering around this level, and weekly closed with a Dozi candle, which is called an indecisive candle.

Most probably, there could be a chance if Nifty Bank Index will show strong upside momentum, the Nifty index can also follow up and be able to break out.

In the previous week, the Bank Nifty Index was rather stronger than the Nifty Index. Let us see, can we get a green candle this week, or will get a follow-up bearish red candle to move further down one again without breaking this resistance level?

Nifty 50 Index Monthly Chart

As we discussed last technical journal, the Nifty 50 monthly index is still in the positive zone and helping the index to maintain upward momentum. The coming week is the last week before the monthly expiry, let us see if the index is able to maintain the close above the previous month's high, which is sitting on 18089 levels.

FIIs Daily Activities

Below is the FII data, which shows, for a whole week, FIIs are on buying spree and DIIs are busy booking profits. Maybe they are expecting redemption pressure, anytime soon, if the market tries to drift below 18000 levels. SIP's inflow is decreasing slowly. but it is still paying more than bank fixed deposits as of now.

Foreign institutional investors (FIIs) bought equities worth Rs 4098.2 crore this week, while domestic institutional investors (DIIs) sold equities worth Rs 677.45 crore.

However, in the month till now, FII purchased equities worth Rs 17,376.31 crore, and DII sold equities worth Rs 4,674.68 crore.

Outlook for the NIFTY 50 Index for Coming Week starts from 22nd May 2023

This week is the monthly expiry so it would be influenced by expiry trades and rollover-centric activities

The top level of 18887 Green Candle with rejection wick from the top, once again matched with a first lower top formed by the Nifty index green candle with rejection wick, which is on the level of 18389.

Can we expect that it is the starting of lower top formation in the nifty index, after a long bull run, which can drift further, even when it is on a strong resistance point, which was not been broken for the last 9 times in a row?

Will the Nifty 50 index ride against the tide this time?

India VIX

Over the past several weeks, the persistently low levels of VIX have remained a concern; this volatility gauge violated its pre-pandemic 2020 lows when it closed

below 11 levels. The previous week India VIX saw a decline of 4.28% to 12.30

Support Level for the Coming Week for NIFTY:

The broader support level on the technical chart could be 18040 followed by 17800.

Resistance Level for the Coming Week for NIFTY:

The broader resistance level on the technical chart could be 18350 followed by 18480.

GLOBAL MARKEt ACTIVITIES: (Just for Information Only)

There has been a slight divergence between the Indian stock market and global stock markets. SPX and other European indices DAX look stronger than the Nifty index. We can not conclude anything, but structurally, it seems they are catching up late or maybe going ahead from our stock markets.

S&P 500 Index On Weekly Chart

European Market - DAX

There are some positive points to note for the coming week's trading:

  1. Record GST Collection in April month, seen improvements.

  2. Improved PMI Numbers

  3. Trade deficit narrows to near 2 year's low

  4. Shart Softening in headline and core inflation

  5. Better corporate Earnings

  6. FIIs supporting Buyings at every lower level

  7. BSE reintroduced Options Trading and every Friday is the weekly Expiry -more room to hedge positions for option traders

  8. S&P and DAX are rising even in uncertainties surrounding debt ceiling talks in the United States

  9. According to the latest updates by IMD expects the onset of monsoon over Kerala is likely to be slightly delayed

  10. Fed chief Jerome Powell made highly scripted and unclear remarks by saying it is unclear if US interest rates will need to rise further.

The recent correction was certainly expected after the decent run and the overall chart structure remains robust, with bulls firmly able to withhold the pivotal support of 18000 to 18042.

We remain positive with a robust approach post the price-wise correction in the index. As discussed earlier, we are under the assumption that the Nifty Bank index is nearing the lifetime high zone, and any breach could contribute to the upliftment of the market sentiments.

Simultaneously, amidst the broader market participation, one needs to keep a stock-centric approach for better trading opportunities and stay abreast of global developments.

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 post is only for learning purposes.

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