Nifty Weekly Analysis for the week ending 29 September 2017

On the monthly chart, Sensex opened the month at 31769, made a high of 32524, low of 31082 and closed the month at  31284 with a loss of 447 points (1.43 %).  Sensex formed first lower high, lower low formation in the monthly chart since December 2016.  At the same time the Nifty opened the month at 9938, made a high of 10179, low of 9687 and closed the month at 9789. Thus the Nifty closed the month with a loss of 129 points (-1.3%).  Nifty formed two consecutive monthly bearish candle since December 2016.

Sensex opened the week at 31986, made a high of 32016, low of 31081 and closed the week at 31283. Thus it closed the week with a loss of 639 points(2.04%). At the same time the Nifty opened the week at 9960, made a high of 9960, low of 9687 and closed the week at 9789. Thus the Nifty closed the week with a loss of 176 points (-1.80%).

1. Last week we have discussed bearish probabilities   “…..Sensex failed to reach previous month high of 32686.5. Same divergence was visible in Bank Nifty also…  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…”. 
2. Nifty broke 9953 level in the first day of the week itself and achieved the target of 9850-9900 level in the same day.   On the same day itself, Nifty closed below 50 day moving average which confirmed more bearishness ahead.     On Thursday, Nifty made a low of 9687.55 just above August low of 9685.55, but managed to close above opening price.  On Friday, Index managed to protect Thursday’s low and broke previous day’s high as well.  Market reacted from oversold level.  This is the first time after 7 consecutive lower high, Nifty is able to break previous day’s high.   
3. Let us compare July-August Rally & its retracement with  August-September rally and its retracement.  In July-August rally Nifty rose 689 points in 23 days  which is the biggest rallying segment in this uptrend from December 2016.  The rally is retraced 66% (452 point fall) in 7 days.  In August-September rally Nifty rose 493 points in 25 days.  The rally retraced fully (491 point fall) in 7 days.  There are similarities in falls of both rallies.  In both rally it took 7 days and fall around 452-491 points).  So if Thursdays low of 9788 is protected then the damage is limited and market move in a sideways move to bullish move.   Sustainability of reversal depends on how fast retracement should took.  Last time the retracement was too slow, then market not able to break previous high, made a double top and retraced fully. 
4. Nifty / Sensex made a double bottom on Thursday.   If Sensex close above 32686 level, then Nifty target for Double Bottom is 10600 level. Else If it close below 9685 level the downside target is 9200 level. 
5. Weakness is visible in daily, weekly & monthly time frames.   Sensex formed first lower high, lower low formation in the monthly chart since December 2016.  Nifty formed two consecutive monthly bearish candles since December 2016.
6. For the coming week, protecting Thursdays low and close above 50 day moving average is crucial for bulls to achieve the momentum. 
7. MACD is made a negative crossover And MACD line turned below 0 line.  RSI & Stochastics are in oversold region.
8. Global financial markets : US markets ended the week marginally higher by 0.1%.  European stocks were mixed.  Except for Japan, Asian markets were trading in the negative territory.
9. On Monthly & Weekly basis,  FII were sellers in the cash segment.
10. Options data for October series indicate highest Call Open Interest has shifted lower at the strike of 10000 whereas the highest Put build-up is at 9700. Thus Options data suggests a trading range with resistance coming at 10000 & support at 9700