Nifty Prediction for the Week Starting From 20 March 2023

The ‘Nifty 50’ opened at 17421 this week, made a high of 17529.90 on Monday itself, and then fell down to make a low of 16850 by Thursday. This move was a bit in line with our last week’s study, in which, we suggested to sell near 17550-17650 for the target of 17255 and 16815. Though, the target was almost achieved but the entry would have been missed by a few points, therefore our previous week’s prediction went into vein.

Let’s have a look at the charts of the index to understand where Nifty is heading towards.

NIFTY 50 Technical Analysis

On the weekly chart, it is visible that the perfectly formed bearish cross (09 EMA below 21 EMA) is intact and the weekly candle opened and closed below 50 week’s exponential moving average. What does it suggest? It suggests further bearishness because the violation of 50WEMA supports the bearish indication provided by the bearish cross formed through 09 and 21 EMAs.

Nifty 50 weekly chart displaying the positioning of 09,21, and 50 Week's Exponential Moving Averages

Let’s have a look at the daily Nifty technical chart, it shows that the bearish cross (09 EMA below 21 EMA) is intact and index is trading below 50DEMA, 200DEMA, and 200DSMA, too. This set up is pure bearish set up but we need to watch our entry level which should be somewhere near the constituents of bearish cross. It means we should enter in a bearish trade near 17400, upon a rebound, which seems very much possible by looking at the last two daily candles. On Thursday a indecisive long legged doji candle has been formed which can also be considered as a morning star candle that could fuel a bullish movement. Further, there was a formation of a dragonfly doji candlestick formation on Friday which is also a reversal indicator.

Nifty Daily Chart displaying the positioning of important moving averages

Let’s now check what hourly chart of the Nifty 50 is exhibiting, it shows that the 09 EMA and 21 EMA are at the verge of forming a bullish cross. However, there is a 50EMA-based resistance near 17200 and 200EMA-based resistance near 17500. It means index might rebound a bit from current levels of 17125 but won’t be able to go much far.

Nifty 50 hourly chart exhibiting the positioning of important exponential moving averages

Alright, so our aforementioned, Nifty technical analysis is suggesting to take a bearish trade near 17400, only if there is a formation of a red daily or even hourly candle, but with a strict stoploss above the high of that candle.

NIFTY 50 Options’ Open Interest and FII-DII Data

Along with the technical charts, the institutional figures also talk a lot about the market trend. If you check the FII DII data, you’ll see that the Foreign institutional investors have sold equities worth ₹7953.66 crores while the Domestic institutions have bought worth ₹9233.05 crores, which means there has been a net institutional buying of ₹1279.39 crores, which might stimulate an upward price-movement.

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Let’s have a look at the options’ data as well, the PUTs and CALLs both have been added on Friday, 17 March 2023. The outstanding OI chart is exhibiting a light PUT-OI-led support at 17000 but good CALL-OI at all upward strikes. Therefore, bearishness is more likely.  

Options' Open Interest data chart

Conclusion

The different components of our above-mentioned Nifty analysis are giving contradicting signals. However, a bearish trade can be taken near 17350-17450 zone, on the formation of a red candle on the daily and even on hourly chart. Just don’t forget to place a stop loss above the high of that candle. Further, if price goes above 17700, then we can think of taking a bullish trade.