Last week was challenging for the Nifty as it breached some significant support levels and closed on a negative note. The volatility also increased, which was not surprising considering the negative sentiment seen in equity markets globally due to the collapse of SVB. The Nifty traded in a wide range of 679.75 points, but despite a recovery on the last trading day, it closed with a net loss of 312.85 points (1.80%) for the week. From a technical perspective, the charts suffered some damage.
The daily charts showed the violation of the crucial 200-DMA level, which currently stands at 17451. Additionally, the Nifty violated the 50-Week MA at 17339, making the 17340-17450 zone a strong resistance area for the index. The Nifty also tested the 100-Week MA at 17050, and the support zone of 16850-17050 from the previous week’s low is significant. Despite the overhead resistance in the 17340-17450 zone, the markets may climb higher if the index can maintain levels above 16850-17000.
The upcoming week may begin slightly tepidly, with potential resistance points at 17250 and 17350 and support levels at 16900 and 16710. The trading range will remain wider than usual. The weekly RSI is 40.77, marking a new 14-period low and remaining neutral without showing any divergence against the price. The weekly MACD is bearish and remains below the signal line.
The pattern analysis of the weekly charts indicates that the Nifty breached the falling trend line pattern support by slipping below it. However, the index defended the 100-Week MA, currently placed at 17050, which remains an essential support level for the market on a closing basis.
The market is presently at a critical juncture, with a narrow trading range of 300-400 points. The supports have been lowered to the 17350-17450 zone, while the index barely remains above the crucial support levels of 16850-17000. The upcoming week needs to be dealt with caution, and it is recommended to keep leveraged exposures at modest levels while approaching the markets on a highly selective and stock-specific note.
The Nifty PSU Bank, Bank Nifty, and Financial Services indices remain inside the weakening quadrant, and they may struggle to keep up with their relative performance against the general markets.