Nifty50 Analysis For the 50th week of 2022

Nifty50 had made a high of 18604.45 on 19 October 2021, after the after-covid-rally and it has been struggling to break that level since then. After more than one year, it broke that level on 29 November 2022 and traded above that zone for about three days. However, it could not hold above that level for long and started trading below 18604 from 07 December 2022.

If you look at above mentioned daily chart, you see that it has made a 9EMA and 21EMA based bullish cross on 21 October 2022, and retested the bullish cross on 22 November 2022. If Nifty holds the low of 09 December 2022 which is 18410.10, and makes a green candle that closes above 18664.70 (which is the high of 09 December 2022), it'll become third retest resulting in a good bullish sign to buy the index this week.

Looking at hourly chart, you see that it has made a 9EMA and 21EMA based bearish cross which has been retested thrice. Currently index is trading right below that bearish cross, so there is a possibility that it might trade slightly bearish or sideways to bearish next week. And because daily chart is showing bullish cross and hourly chart is showing bearish cross, it’s better to avoid trading until both the charts give similar signal.  

Let’s have a look at Options’ open interest data. Look at the chart below, it shows that there has been a good call writing on 09 December 2022. It is also visible that there is a call writing of 1.34746 crores at 18600, and open interest is much lesser in OTM puts than call writing in OTM calls. The PCR is also about 0.5167 which is a sign of bearishness.

Upon looking at the FII DII Data, we see that net FII buying has been negative last week which means they have been sellers entire last week who sold stocks worth ₹4305.97 crores from 05 December 2022 to 09 December 2022. On the other hand, DIIs have bought shares worth ₹3712.08 crores. This data shows that Institutions have been net sellers last week which is a negative signal for the market. However, upon looking at the volumes, you can see that there is no exceptional surge in the volumes in the week passed. Therefore, going bearish can also be a riskier bet because investors and traders are buying every dip these days.

After studying above mentioned technical and other indicators, it seems that buying above 18664.70 and selling below 18410.10 could be a better strategy for 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 experts’ opinion before taking any trade.