Nifty Weekly Analysis for the week ending 22 September 2017

Global financial markets : Europe/ US markets closed higher.  Asian markets closed lower.

Weekly basis,  FII were sellers in the cash segment

Options data for September series indicate highest Call Open Interest is at the strike of 10200 whereas the highest Put build-up is at 9900.   There are huge open interest addition at the strike of 10000 call, 10050 call, 10100 call and 10200 call.   At the same time  there are huge unwinding of Open Interest at the strike 10100 put, 10000 put and 9900 put which indicate bearishness of the market.  

Nifty opened the week at 10133, made a high of 10179, low of 9953 and closed the week at 9964. Nifty closed the week with a loss of 121 points (-1.56%).After 3 consecutive higher low weekly candles, Nifty made weekly bearish engulfing candle.   On Sensex a weekly dark cloud cover pattern is formed.   Both are bearish pattern.

On the daily charts, on Friday, both the indices have formed a big Opening Black body Marubuzo candle.  Nifty and Sensex made 3 consecutive lower high candle on daily chart.  Nifty made maximum 4 consecutive lower high candle in this uptrend from Dec 2016.

Last week I have argued that  “Sensex all-time high is 32686.48 which is little away from current price.  Also Sensex is trading below its 80% retracement levels.   Sensex should close above 32396 for further upmove.  Nifty should close above 10138 level within 10 days time frame for further upmove.  For Nifty Important resistance level is 10138 - 10200 level.   Option data also suggest 10200 level as an immediate resistance.  If Nifty closed above that next target would be around 10350-10400 level.  .…..”
  Nifty not able to move above the resistance zone of 10138-10200 level.   Sensex failed to reach previous month high of 32686.5. Same divergence was visible in Bank Nifty also.  This is negative indication for market ahead.  For any bullish possibility Sensex should close above previous month high of 32686.5.

Nifty made a weekly engulfing bearish candle and Sensex made dark cloud cover pattern.   For the confirmation  Nifty / Sensex should close below Friday’s low of 9952.8 / 31886.09 levels.  Target 9850-9900 level

Nifty / Sensex made a double top formation.  If Sensex close above previous month high  double top formation invalidate.   For the confirmation of Double Top, Nifty should close below 11 August low of 9685.55.   Target for Double Top formation is 9200 level which is 40% of entire upmove from Dec 2016.

Sensex high all time high of 32686 on the week ending 4th August.  In one week Sensex .  Sensex made a fall of 1558.5 point in one week.  Now it took 5 weeks for retracement and not able to close above 32686 level which indicate weakness of the market.

Structurally Nifty and Sensex near Trendline support level.   If Nifty close below Friday’s low 9952.8 then on daily chart, a short trendline connecting low of 9685.55, 9740, 9783.75 is broken.  But the trendline connecting from April,  June & August are coinciding with 50 day moving average.

For Nifty, 50 day moving average stands at 9918 – 9954 level which was crucial in previous down move in protecting Nifty upmove.

Sensex is making a contracting triangle connecting from the high of 32686 to 32524 on upper channel and a low of 31128, 31360. So holding Friday’s low  is crucial for bulls.

MACD is now making attempt to show negative crossover signal (MACD line is turning below its signal line, without crossover).  Also observed negative divergence on both weekly and daily time frames in Nifty / Sensex RSI / Stochastics and MACD.   This indicate market may be running of steam.

FIIs are continuous sellers.

Nifty P/E level reached 26.42 on Monday for the first time in this trend from Dec 2016 onwards.  All time high of Nifty P/E is 28.47 in 2000.