NIFTY BANKNIFTY OUTLOOK FOR EXPIRY WEEK 24 JAN 2022 TO 28 JAN 2022

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WEEKLY RESISTANCE FOR NIFTY: 17700, 17900, 18200

PIVOT POINT: 17500

WEEKLY SUPPORT FOR NIFTY:  17300, 17200, 16800

WEEKLY CHART FOR NIFTY

DAILY RESISTANCE FOR NIFTY: 17700, 17800, 17900

PIVOT POINT: 17600

DAILY SUPPORT FOR NIFTY:  17500, 17400, 17300

DAILY CHART FOR NIFTY

Monday morning, the global markets looked a bit nervous but as we approached our opening time, the SGX Nifty recovered to some extent and as a result, we kick started the week marginally in red. Market did not take much of a time to enter the positive terrain and then remained within a slender range throughout the remaining part of the session. Although there was no real momentum in key indices, Nifty managed to reclaim the 18300 mark at the close. Our markets started the Tuesday’s session slightly in the green but right from the beginning the benchmark index looked a bit tentative. In the initial hour, Nifty tested sub-18200 levels from where the banking space took the charge and lifted markets higher to trim all losses. But market was not done with its action yet. As we stepped into the penultimate hour, the global markets became extremely nervous which resulted in a sharp decline to test 18100 at the close. Tuesday’s unpleasant session was followed by a flat opening on Wednesday despite SGX was indicating a weak start. However without wasting much of a time, the selling aggrandized in the market. Barring some recovery in the initial hour, there were no signs of respite in the benchmark index. Eventfully, Nifty ended the session above 17900 by losing yet another percent to the previous close. Thursday markets remained under pressure for the third successive session on Thursday 20 January 2022 and lost nearly 1%. The tone was negative from the beginning, tracking weak global cues which further deteriorated as the day progressed. However, a rebound in the final hour trimmed some losses.  Consequently, Nifty settled around 17757 levels; down by 1.01%. Nifty opened gap down on January 21 and posted a negative daily close for the fourth consecutive session. Domestic market continued its downward journey amid global sell off. Nifty opened negative and nosedived 222 points during the session to touch low of 17486. It however recovered from its days low and closed with loss of 140 points (-0.8%) at 17617 levels. 

NIFTY: A STRONG SUPPORT WILL BE @ 17200; STRONG RESISTANCE LEVEL SEEN @ 18200

Nifty opened gap down and headed to it crucial support of 17500 zones. It moved in a range bound manner with weakness but slight recovery was seen towards the end. It finally closed the day with losses of around 140 points, after taking support near to its 50 DMA. It formed a Doji candle on daily scale after the weakness of last three sessions and has been forming lower lows from the last four sessions. It formed a Bearish candle on weekly scale and wiped of all its previous week’s gains. It negated its higher lows formation of the last three weeks and taken a pause in positive momentum on medium term perspective. Now till it remains below 17700 zones, weakness could be seen towards 17500 and 17300 whereas hurdles exists at 17750 and 17850 marks.

Bank Nifty opened gap down and even though it hit 37200 levels during the day, it witnessed stellar recovery in the last hour of the session. It bounced after taking support at its 50 EMA and closed with losses of around 275 points. It formed a small bodied Bullish candle on daily scale and has been forming lower lows from the last four sessions. It formed a Bearish candle on weekly frame and negated its lower lows formation of the last three weeks. Now till it holds below 37750 zones, weakness could be seen towards 37200 and 37000 levels while resistance can be seen at 38000 and 38200 levels.

TECHNICALLY SPEAKING

The market slipped 1% again, continuing the steep fall for the third consecutive session on January 21 as consistent FII selling, elevated oil prices, rising inflation concerns and caution ahead of Fed meet weighed on the sentiment. The Sensex closed the week below the 60000 mark, falling 427 points to 59037, while the Nifty plunged closed below 17650 mark to 17617 and formed a bearish candle on the daily charts again, indicating nervousness among traders. . It witnessed a tough battle between the bulls and the bears throughout the day, which has resulted in a Doji formation on the daily chart. The index breached the 38.2% retracement of December-January rally on an intraday basis however received strong support as it approached 17500. Thus it managed to hold on to the key Fibonacci level, which is at 17610, on a closing basis. The hourly momentum indicator got pushed into the oversold zone where it has developed positive divergence & is looking for a recovery. All these observations show that the index is in the far end of the short term correction & can attempt a bounce back. On the higher side, 17700-17800 is an immediate resistance zone. Once that is crossed, the index can test 18000 on the upside. On the flip side, immediate support zone is placed at 17600-17500.

A long bear candle was formed on the daily chart with lower shadow. This is back-to-back three such negative candles in a row in the last three sessions. Technically, this pattern signals a sharp profit booking in the market from the highs of 18,350 levels, and the formation of lower shadow on Thursday could signal chances of buying emerging from the lower support of 17,650 levels.

The short-term trend of Nifty continues to be down and there is no clear evidence of bottom formation at the lows. "A sustainable up move in the subsequent session is likely to confirm higher bottom reversal in the market. The lower area of 17,650-17,600 levels is expected to be a strong support zone for the market ahead.

However, the broader markets continued to fare better than benchmarks as the Nifty Midcap 100 index declined 0.16% and Smallcap 100 index was down just 0.05%.

We have collated 15 data points to help you spot profitable trades:

Note: The open interest (OI) and volume data of stocks given in this story are the aggregates of three-month data and not of the current month only.

Key support and resistance levels on the Nifty

According to pivot charts, the key support levels for the Nifty are placed at 17622, followed by 17487. If the index moves up, the key resistance levels to watch out for are 17917 and 18078.

Nifty Bank

The Nifty Bank was down 276 points to close at 37574 on January 21. The important pivot level, which will act as crucial support for the index, is placed at 37500, followed by 37300. On the upside, key resistance levels are placed at 38200 and 38500 levels.

Call option data

Maximum Call open interest of 76.75 lakh contracts was seen at 18,000 strike, which will act as a crucial resistance level in the January series.

This is followed by 19,000 strike, which holds 70.05 lakh contracts, and 18,500 strike, which has accumulated 57.36 lakh contracts.

Call writing was seen at 19000 strike, which added 53.73 lakh contracts, followed by 18,000 strike which added 45.33 lakh contracts, and 18,500 strike which added 33.56 lakh contracts.

Call unwinding was seen at 17,400 strike, which shed 26,450 contracts, followed by 17,300 strike which shed 16,950 contracts, and 17,100 strike which shed 6,250 contracts

Put option data

Maximum Put open interest of 42.44 lakh contracts was seen at 18,000 strike, followed by 17,000 strike, which holds 40.04 lakh contracts, and 17,500 strike, which has accumulated 31.84 lakh contracts.

Put writing was seen at 18,000 strike, which added 13.87 lakh contracts, followed by 17,800 strike, which added 7.59 lakh contracts, and 17,600 strike which added 6.96 lakh contracts.

Put unwinding was seen at 18,100 strike, which shed 2.42 lakh contracts, followed by 18,300 strike which shed 1.31 lakh contracts, and 18200 strike which shed 39700 contracts.

The advent of new Covid variants and the associated uncertainties has kept the markets and the economies globally on edge. We hope that the Union Budget could bring about some confidence and stability in current volatile markets. With state elections lined up in over five states in 2022, we believe that a focus on job creation and investment-driven growth would be paramount. We see that asset monetization and higher disinvestment will continue to fund the development projects. To boost consumption, we expect an increase in the limit of standard deduction and home loan tax deductions. Overall, we believe that policy reforms and government spending on infrastructure development will boost economic recovery, giving ample opportunities to retail investors for growth.