Nifty Weekly Analysis for the week ending 29 December 2017

On the Yearly chart, Sensex opened the year at 26711, made a high of 34138, low of 26447 and closed the year at 34057 with a gain of 7430 points (28%).  At the same time the Nifty opened the month at 8210, made a high of 10552, low of 8134 and closed the month at 10531. Thus the Nifty closed the year with a gain of 2345 points (29%).  Sensex, Nifty Post Best Annual Gains In Three Years

On the monthly chart, Sensex opened the month at 33248, made a high of 34138, low of 32565 and closed the month at 34057 with a gain of 907 points (2.74 %).  At the same time the Nifty opened the month at 10264, made a high of 10552, low of 10033 and closed the month at 10531. Thus the Nifty closed the month with a gain of 304 points (2.97%).

Sensex opened the week at 33981, made a high of 34138, low of 33752 and closed the week at 34057. Thus it closed the week with a gain of 117 points (0.34%). At the same time the Nifty opened the week at 10512, made a high of 10552, low of 10460 and closed the week at 10531. Thus the Nifty closed the week with a gain of 38 points (0.36%).

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

1. India's key equity indices Sensex and Nifty50 closed calendar year 2017 higher by 28 per cent and 29 per cent respectively
2. India was the third best emerging market in the world this year after Argentina and Turkey, according to Bloomberg
3. Equity benchmarks traded in a narrow range and closed higher by 0.3% during previous truncated week amid muted global cues.
4. Last week , in point no.4, we have discussed “On Friday, Sensex has formed a bullish White opening Marubuzo.  On the weekly charts, both the indices have formed a bullish White closing Marubuzo.  Both daily and weekly indicate the bullishness of the market. “.  The Nifty started the week on a positive note and formed a fresh all time high of 10552 in Wednesday’s trade. Profit booking in the middle of the week saw the index gave up some of its gains and formed an intraweek low of 10460. The index however witnessed a pullback on Friday’s trade to close the week above 10500 levels for the first time.
5. Last week, in point no.7 we have discussed “Next week will be a truncated week with Monday being a trading holiday.   There is a probability of profit booking at higher levels as a bearish divergence persist on RSI.   Nifty has set a fresh 14-period high, while RSI has not. Also, it has continued to form lower tops and is yet to break out of this formation. The weekly MACD is still bearish even as it trades below the signal line.   So once the lead indicators come out of bearish divergence, we can expect the above mentioned target of 11000.”.  Bearish Divergence still evident in RSI. 
6. The Index maintained positive bias with higher high and higher low sequence and gained for fourth consecutive week.  Looking at the bull trend from 2016, maximum number of weekly bull candle is 5.  So probably there is a chance of correction in coming week or the week after coming week.
7. I am considering the immediate support base for the index in 10200-10300 region as it is the confluence of following:
1. The present value of rising trend line joining the lows of December 2016 and September 2017 placed around 10200 levels.  On a weekly closing basis, the index has continued to show respect to the trend line joining the December 2016 and September 2017 low. 
2. The 61.8% retracement of the recent up move from 10033 to 10552 placed around 10232
3. Option data also suggest 10300 level will be an immediate support for January.
8. I have mentioned in my post dated 3^rd December in point no.6 “In December Indian Benchmark complete 22 months of bull market. Index topped every 2 years and made a good correction after that.  Let us look at the  major reversals, in 1992 (-57%), 1994 (-39%), 1996 (-34%), 1998 (-36%),2000 (-58%), 2002 (-25%), 2004 (-33%), 2006 (-30%), 2008 (-64%), 2010 (-28%),2013 (-14%),2015 (-25%).   So timewise Indian benchmark is nearing its maturity for a correction.”.  Now Indian Benchmark completed 22 months of bull market.   If we consider a 15% correction market may fall until 8980-9000 level for Nifty and for Sensex, it is 29000-29100 level.  Previous resistance in July 2016 and 61.8% retracement from December 2016 also placed in the same region.   So I don’t think the possibility of going below this area.   If market goes to this level, it can be treated as a good buying opportunity.  Until we get a significant correction, it is early to assume bull trend is over. 
9. Global financial markets: Global stock markets ended the week on a mixed note
10. On Weekly basis, FII were buyers in the cash segment.  On monthly basis FII were net sellers in cash segment. 
11. Options data for January series indicate highest Call Open Interest is at the strike of 11000 whereas the highest Put build-up continues at the strike of 10300. Thus Options data 10300 level will be an immediate support in January series and 11000 will act as an immediate resistance.

Wish you a happy and prosperous New Year 2018