4% on Friday a day after the sharp crash that wiped off a significant portion of investors’ wealth. 50.
Broader markets remained mixed, with Nifty Midcap 100 in red and Nifty Smallcap 100 in green. Analyst Sudeep Shah, Vice President and Head of Technical & Derivatives Research at SBI Securities, interacted with ETMarkets regarding the outlook for the Nifty, options data, and an index strategy for the upcoming week.
The following are the edited excerpts from his chat: Nifty slipped 1% this week, logging 8 consecutive declines for the first time. How do you see Nifty panning out next week?
For the seventh consecutive week, the benchmark index Nifty ended on a negative note, marking its longest weekly losing streak since the COVID-led market decline in 2020. The sharp rise in the US 10-year bond yield, coupled with heightened volatility in Brent crude oil prices, has continued to weigh on market sentiment.
The US 10-year bond yield is currently hovering at its highest level since 2007, adding to concerns over global financial conditions. With global headwinds refusing to fade, the real test for Nifty is whether the ongoing weakness has further room to run.
Technically, the weakness remains evident as Nifty is trading around 3% below its 50-day EMA and nearly 4% below its 100-day EMA, with both averages trending downward. The Daily RSI once again faced resistance near the 40 level and turned lower, indicating that the range has shifted into a super-bearish zone as per the RSI Range Shift theory.
The failure of RSI to reclaim 40 suggests that every recovery attempt could face a familiar wall of selling pressure. The other momentum indicators are also reinforcing the bearish setup.
The Daily MACD remains bearish, with both the MACD and signal lines trading below the zero line. More importantly, the MACD histogram has remained below the zero line for the last 30 trading sessions, highlighting the persistence of negative momentum.
Thirty sessions of negative histogram readings are difficult to ignore, and the next move could reveal whether momentum is merely weak or turning decisively weaker. Going ahead, the 23,270–23,300 zone will act as a crucial hurdle for the index.
As long as Nifty stays below 23,300, the broader downward trend is likely to remain intact, with the index potentially moving towards 22,800, followed by 22600. For now, 23,300 remains the line in the sand: will Nifty reclaim it to challenge the bears, or will the downside targets come into focus?
