Nifty Weekly Analysis for the week ending 27 October 2017

Sensex opened the week at 32412, made a high of 33287, low of 32313 and closed the week at 33157. Thus it closed the week with a gain of 767 points (2.4%). At the same time the Nifty opened the week at 10177, made a high of 10366, low of 10125 and closed the week at 10323. Thus the Nifty closed the week with a gain of 177 points(1.74%).

Last week we have discussed “…On daily chart, Sensex made engulfing bearish candle.  So breaking Thursday’s low validate further bearish possibilities…...Both Sensex and Nifty near daily  channel line support. So protecting Thursday’s low is important for bulls to further upmove. “

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

1. Indices took its channel line support and made a bullish harami patter on the first day of the week itself.  At the same time Sensex made a bullish piercing pattern formation.   On Wednesday both Sensex and Nifty made a gap cap candle and closed above previous record high. Now Sensex and Nifty trading near its channel line resistance.    
2. Last week we have observed that Sensex not closed above its previous high.   But on this week Sensex made a fresh life time high and closed well above its previous closing of 32686 and outperformed Nifty as well.
3. In my post dated 14^th October, we have discussed “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.   Both Sensex and Nifty achieved its first target.. 
4. On Weekly Chart, Nifty made 4 consecutive weekly candles.  The benchmark Sensex posted its biggest weekly advance since March 2017.
5. On daily chart, Indian Benchmark made 5 consecutive higher high candle.
6. The rollover rate in the Nifty October futures, which expired Thursday, was 73 per cent, compared with a three-month average of 65 per cent on expiry.
7. Last week, we observed a negative divergence between Nifty index and Bank Nifty index. This week, the government's recapitalisation plan pushed the Bank Nifty higher and closed the week with 3.46% gain.  Unfortunately, the index failed to make a new life high. This is mainly  because of the under-performance of Private Banks.  .  After hitting 9 months low, PSU bank retraced its 5 months correction in a faster time and closed above its all-time high. 
8. Nifty P/E level reached 26.73 on Thursday.  All-time high of Nifty P/E is 28.47 in 2000.
9. Global financial markets : Global Markets ended the week on a positive note. 
10. Last week we have discussed about outflow of FIIS in Indian Market.  PSU recapitalisation reduced the selloff.  The net outflow for the month below US$1 billion (lowest outflow since August).  On Wednesday, FII buying was more than Rs 3500 crores, highest since last 7 months.   On Weekly basis,  FII were buyers in the cash segment. 
11. Options data for November series indicate highest Call Open Interest is at the strike of 10500 whereas the highest Put build-up is at 10000. Thus Options data suggests a trading range with resistance coming at 10500 & support at 10000