Nifty Weekly Analysis for the week ending 19 October 2017

Sensex opened the week at 32488, made a high of 32700, low of 32319 and closed the week at 32390. Thus it closed the week with a loss of 43 points (-0.13%). At the same time the Nifty opened the week at 10207, made a high of 10252, low of 10123 and closed the week at 10147. Thus the Nifty closed the week with a loss of 21 points (-0.21%).   Market hits all time record high in this week.

Last week we have discussed “…..Inter-market divergence: When Nifty made a new all time high, Sensex not repeated the same thing.  Remember the fall and retracement of last time; Nifty fell 452 points in 7 days from 2nd Aug to 11th Aug and retraced the rally and made new high on 19th September.  But the same was not happened in the Sensex.  Nifty  lost all the gain and fell 491 points.   So to confirm the bullish breakout, Sensex also should close with new record high.  If Sensex close above its record high expecting a medium term target of 33000 – 34000.  Same time Nifty target for medium term is 10300-10600 level.”

Let us discuss few observations on last week Indian benchmark movements. 

1. Nifty closed well above previous high, at the same time Sensex also broke the high but not able to close above previous high of 32686.  Sector wise  Banking, Auto, Infra, consumer goods, FMGC
2. Markets made a weekly bearish candle after two consecutive weekly bullish candle.
3. On daily chart, Sensex made engulfing bearish candle.  So breaking Thursday’s low validate further bearish possibilities.
4. On daily chart, Sensex and Nifty made two consecutive lower high, lower low candle. In this uptrend from 28 September, this is the first time Indices making two consecutive lower low, lower high formations.  
5. Both Sensex and Nifty near daily  channel line support. So protecting Thrusday’s low is important for bulls to further upmove.
6. Nifty P/E level reached 26.55 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. Nifty made a 491 point correction after hitting P/E ratio at 26.42 on 18 Sep 17. 
7. Bank Nifty has shown clear negative divergence against Nifty.  Bank Nifty retraced only 85% of the fall.  At the same time Nifty retraced 115%.   Bank Nifty made a fall of 993 points in 3 days.  78% of upmove is retraced in 3 days.  Nifty PSU Bank index hits fresh 9-month low
8. On daily chart Stochastic in overbought zone and made a bearish cross-over.  On weekly chart RSI is showing negative divergence.
9. Global financial markets : Global Markets ended the week on a positive note. 
10. On Weekly basis,  FII were sellers in the cash segment.  US Market attract largest inflows in 18 weeks.  But Indian Markets FIIs outflow continues.
11. Options data for October series indicate highest Call Open Interest is at the strike of 10200 whereas the highest Put build-up has shifted higher at 10000.  There is a huge unwinding seen at the strike of 10200 put and huge addition of Call Open Interest seen at the strike of 10200, suggests 10200 is a strong resistance and a correction until 10000 level.