Nifty Weekly Analysis for the week ending 02 February 2018

Sensex opened the week at 36106, made a high of 36444, low of 35006 and closed the week at 35067. Thus it closed the week with a loss of 984 points (-2.73%). At the same time the Nifty opened the week at 11079, made a high of 11171, low of 10736 and closed the week at 10760. Thus the Nifty closed the week with a loss of 309 points (-2.79%).

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

1. On the weekly charts, both the indices have formed a Bearish Engulfing pattern. This is the first negative week after 8 positive weekly closing.
2. On the daily charts, both the indices have formed a “Long Black Day Candle”.
3. Thus daily as well as weekly charts suggest strong bearishness in the near term.
4. Indian Benchmarks made the worst single-day fall since August 2015.  Exactly after 2.5 years. This can be read together with point no.6 of my post dated 1^st December 2017 saying that “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 time wise Indian benchmark is nearing its maturity for a correction.”.    Now Indian Benchmark on 24 months on bull market.
5. This week, both the indices breached and closed below the short term average of 20dma.  But still above the medium term average of 50dma and above the long term average of 200dma.  Thus the trend in short term timeframe turned bearish, whereas the trend in the medium term and long term timeframe continues to remain Bullish.
6. Time wise Indices took 39 days from 6^th December to achieve 1139 points.  This is the highest bullish swing move till December 2016. In 4 days from 29 Jan, Nifty made a fall of 436 point.  Biggest fall is made in Sept 2017; Nifty made a correction of 491 points in 8 days.  That time Nifty made a double bottom formation.  Considering that Nifty can go down until 10000 level.   Moving below 10000 level indicate serious trend reversal. 
7. In my last week post I have mentioned “Nifty P/E level reached 27.81 on Tuesday.  All-time high of Nifty P/E is 28.47 in 2000.  Same time Sensex P/E ratio reached at 26.34 on Wednesday. All-time high of Sensex P/E is 29.39 in June 2000.    As I mentioned last week Investors and Traders should take a careful approach of trading “.   Sensex lost around 4000 points within a quick span of one month during the 2008 financial crisis.
8.  Options data for February series indicate highest Call Open Interest is at the strike of 11500 whereas the highest Put build-up is at the strike of 10500. There is a huge addition of Open Interest at Call strike of 11,200, 11,000, 10,900 & 10,800.  There is a huge unwinding of Open Interest visible at put option strike 11000.  These indicate bearish undertone of the Market.  
9. On daily chart, MACD has given a fresh Sell signal. Thus Oscillators are suggesting a bearish bias for the near term
10. Global financial markets: Global stock markets ended the week on a negative note. 
11. In January, FIIS were net buyers.  It is after 5 months FIIS become buyers on monthly basis.    On Weekly basis also, FII are Buyers in Cash Segment.     At the same time DIIS buying is reduced.