Weekly Market Outlook for 6 Mar to 10 Mar

In the week gone by, Nifty oscillated within the range of 17470-17250 for most part of the week. The momentum readings were oversold and the index surpassed the high of this consolidation in Friday’s session. This led to a positive momentum throughout the day and Nifty recovered some of the recent losses to end around 17600 with weekly gains of about three-fourth of a percent.

Nifty Today:

Our markets had seen a sharp correction in last few days wherein Nifty corrected from 18134 to 17255 in just nine trading sessions without any pullback move. This resulted in oversold set ups on the lower time frame chart for Nifty. At the same time, the BankNifty gave a positive divergence at the start of the week as the Nifty breached its Budget Day low while the BankNifty did not. The banking index started showing strength and momentum readings in the same gave a positive crossover and it ended the week with a 'Bullish Engulfing' pattern on the weekly chart. Another factor was the FIIs positions in the index futures segment where they had formed short positions and had about 85 percent of the positions on the short side. With around 1.60 Lakhs contracts on the short side, these positions are short heavy and in June 2022 too we had a similar scenario when index was around 15200 and we then witnessed short covering. Since their positions are short heavy, it is likely that they would cover the positions which would keep a positive momentum intact in the near term. The USDINR which was hovering around 83 levels since last few days appreciated on Friday, which too triggered a positive momentum.

Short covering lifts indices higher, banking space led the momentum

Apart from these, the Nifty Midcap100 and the Small cap index have interestingly formed a support base around the previous swing lows and have resumed their positive momentum. All the above factors hints that the price wise corrective phase may be over and the markets has likely started the next leg of upmove. The ’20 DEMA’ for Nifty is placed around 17650 which is the important level to watch above which, the index could attempt to rally towards 17800-17850. On the flipside, 17480 followed by 17400-17350 range would be seen as immediate support on any decline. Any declines in the coming week should be used as a good buying opportunity for the short term.  

Nifty & Bank Nifty Levels: