Nifty 50 Analysis for the First week of 2023

We predicted, in our last week’s study, that ‘Nifty 50’ might retest the level of 18050-18150 before falling further. We also predicted that it has a room of an up-move of up to 21DEMA from the weekly EMA-based support at 17800; same thing has happened as can be checked in the video below.

NIFTY 50 Technical Analysis

The weekly chart, in the video below, shows that the Index has retested the bullish cross (09 EMA above 21EMA) by making a green weekly candle with the high of 18265.25. If price goes above this weekly high next week, it is slated to make a high of 18885 in coming weeks. However, weekly close happened right below the 09 week’s EMA, and, if price doesn’t go above that EMA next week, Nifty might show further decline.

As shown in the video below, the daily chart of the index shows that the bearish cross (09 EMA below 21EMA) has been retested on Friday, 30 December 2022, and price closed below both the DEMAs making a good red daily candle. The daily RSI (7-length) is at 42-43 levels, from where it has a good room to go towards either side. Based on the daily chart reading, we may witness a decline of up to 17460, which is 200DEMA, followed by 17771 which is latest low.

The hourly chart is a bit confusing as it has a bullish cross (09 EMA above 21EMA) intact but the price closed below both the EMAs. The hourly RSI (7-length) is also at 42-43 levels, from where it has a good room to go towards either side. The hourly Nifty trend-chart also shows that the two higher-highs and higher-lows have been formed, and price is at third higher-low. If index goes up from this level and makes another higher-high, we can see the further up move, but, if it breaks the lower trendline and goes down, we may witness a further fall.

After looking at the weekly, daily, and hourly charts, I presume that Nifty would make further decline of up to 17460 followed by 17771, based on the daily chart reading. However, if it does not fall, then it is likely to make a good up move of up to 18885 followed by 18695, based on the weekly chart reading. So based on the Nifty technical analysis, it is good to sell below 18080.30 with a target of 17460 followed by 17471, keeping a stop loss of 18265.25. If index doesn’t go down, then buy above 18265.25 with a target of 18620, keeping a stop loss of 17774.25.

NIFTY 50 Open Interest and FII, DII Data

The OI change data, in the video above, shows that there has been a good call writing on Friday, 30 December 2022, with negligible put writing. Also, the OI data, in the video above, shows that strong call writers’ zone is 18200-18300 price-zone and slightly better put writers’ zone is 17900-17800 price-zone. Which means our study of OI data gives us a bearish signal.

The FII DII data shows that foreign institutional investors have sold the shares worth of ₹5761.56 crores and domestic institutions have bought the securities of worth ₹5062.45 crores last week. So, the net institutional selling of ₹699.11 crores has happened last week which means bears are slightly stronger than bulls, and therefore further decline is more likely.

Conclusion

After looking at all the data and chart, it seems that market will remain bearish next week, because

• Bearish Cross retested on Daily chart,
• Price closed below both the EMAs on hourly chart,
• Institutional figures are showing bearishness,
• Weekly closing below 9 week’s EMA (albeit bullish cross is intact),
• Open Interest Data is bearish

So, the overall sentiment is bearish therefore we expect it to fall below 17800 to make a further low of 17460 next week.

Note: I have just shared what I studied. I am not sure if I’ll trade next week or not. Also, the Data, used for analysis, has been taken from different sources on internet and I am not a SEBI authorized analyst, therefore verify the data and seek expert's opinion before taking any trade.