NIFTY-Weekly View-Venkat's Blog

Post month end expiry we have seen a steady decline in Nifty levels, though Bank Nifty maintained the upward bias. Past week formed an inside and bearish candle. While the consolidation at every stage is a healthy sign, it appears that the Nifty is showing signs of weakness ahead of the year end.

A few observations from the weekly charts are:
Weekly charts suggest that

• The index moved around 318 points viz. between 18410 and 18728
  the oscillators are showing divergence
  Option OI is expected to drive the market direction
  
  

Additional observations from the weekly chart

*The Index made lower highs and higher lows and it ended up with a bearish candle
Expected scenarios for the ensuing week
Most likely scenario could be a consolidation between 18300 and 18770
Though closed at 18496, the Index is expected to open lower
Break below the trend line support at 18570 is considered negative. However, it is too early to conclude that the trend has completely reversed
The zone between 18400-18600 has been a slippery wicket and witness a sharp move on either side
For the ensuing week, the index may find supports at 18400, 18285, 18130 and the index could face resistances at18520., 18640 and 19730
A daily close below 18400 would be seen as strongly biased towards a quick move towards 18200


*The reversal from new ATH to breach previous Fib support of 18530 is considered negative
Both FIIs and DIIs seem to be net negative (possibly on profit booking)
Two possible scenarios
Expected range of 18240-18640 or 18400-18800(if 18400 is not breached)
Narrower range of 18400-18700 is crucial for deciding further direction
Any breach on a daily closing basis below 18400 would trigger stops and we may expect the move extending to 18240. Any close outside the range of 18240-18800 requires re-assessment of risk

Final Note

*Till we see a close below 18K which is like completely erasing previous monthly gain, we can safely assume that there is potential for consolidation in a narrower range
If for any reason we see a closing below 18400 then there are chances that we may see a course correction before reemerging with renewed vigor
This week will final indication for a further direction of the market
There are higher possibilities of churning of portfolio
Just a couple of sessions/weeks make markets to change perceptions
Possibly the last week of active trading before the FIIs wind-up for festive season and Year End


Disclaimer: The views expressed here are personal and not connected to SYFX Treasury Foundation. The views are for learning and reference purpose only.