Nifty ended the last week with a loss of 2.67%, following a six-day losing streak. We were already struggling to move higher, and now weakness in global markets due to jump in US bond yields is acting as a major headwind. Markets will closely watch the movement of US bond yields and the dollar index as well as the direction of global markets in the near term as the interest rate scenario in the United States in the first half of 2023 will continue to be a major factor. The market is currently not responding that much to the geopolitical situation, but any unexpected development—positive or negative—could cause the market to move significantly. Domestically, our Q4 GDP numbers and monthly auto sales numbers will be the key macro factors this week.
Technically, we are in a short-term decline, but we are very close to a key support level at the 200-day moving average, which also happens to be the Budget Day low. Hence the bulls will try to protect the 200 day moving average of Nifty. If smelly Able to sustain its 200-DMA, the index would make a double bottom, which could trigger a pullback in the market. On the upside, the 20-DMA near 17770 will continue to act as an important hurdle; Above this, we can expect a short-covering move towards 18000–18100 range. However, if Nifty is unable to sustain its 200-DMA, then the selling pressure will increase and 17130 will be the next support.
A similar trend can be seen in bank niftyWhere both the 200-DMA and the budget day’s low are near 39400. If it can sustain this level, we can expect a rally towards 41000 and 41500, but if it breaks below the 200-DMA, we can expect further downside. Selling pressure towards 38500.
The Put/Call ratio is at 0.79 and FIIs started the March series with 82% short positions, both pointing to an oversold market, if we look at the derivatives data. Last two times, in July and October 22, FIIs started new series with such huge short positions that Nifty experienced rallies of around 1000 points. This data represents hope for the bulls.
,Santosh Meena, Head of Research, Swastika Investmart Ltd.
,The views and recommendations given above are those of individual analysts or broking companies and not of Mint.
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