NIFTY BANKNIFTY WEEKLY OUTLOOK FOR 12 DECEMBER TO 16 DECEMBER 2022

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WEEKLY RESISTANCE FOR NIFTY: 18500, 18700, 18900

PIVOT POINT: 18300

WEEKLY SUPPORT FOR NIFTY:  18100, 17900, 17700

WEEKLY CHART FOR NIFTY

Our markets started the week flat as there were no global or domestic triggers. As the week progresses, major indices remain dormant. During RBI's midweek monetary policy, it appeared as if the governor was dampening sentiment; but the very next day, the banking sector proved its importance as we watched BANKNIFTY make new highs towards the end of the week. On Friday, December 9, 2022, the IT counters became a spoilsport by pulling Nifty below the 18500 mark. Luckily, the tail-end recovery pulled Nifty out of lower levels to convincingly defend 18400. Our markets started the week flat as there were no global or domestic triggers. As the week progresses, major indices remain dormant. During RBI's midweek monetary policy, it appeared as if the governor was dampening sentiment; but the very next day, the banking sector proved its importance as we watched BANKNIFTY make new highs towards the end of the week. On Friday, IT counters became a spoilsport by dragging Nifty below the 18500 mark. Luckily, the tail-end recovery pulled Nifty out of lower levels to convincingly defend 18400.   The Indian stock market started the week of December 5, 2022 on a muted note despite positive global developments over the weekend. The benchmark index slipped immediately after the opening bell, but the decline boded well for the bulls as they retaliated from the lows and staged a modest recovery in the market scored index. We have seen some reluctance in the index as follow-up buying from the big heavyweights has failed and the index has been a muted move throughout the day. After the rush, Nifty ended the day on a flat note with a mere 0.03%  gain and settled a little above the 18700 level. Weakness among global peers led to a tentative open in our stock market on December 6, 2022. The benchmark index Nifty50 started the day with a small gap in the red and has been range bound on the lower end throughout the session. Amid the lackluster session, the bulls staged a comeback in the penultimate hour, staging a modest recovery to erase some of the initial losses. The Nifty closed near the daily high, shedding nearly 0.30% and settling slightly below the 18650 level. Our domestic market collapsed on December 7, 2022 following the RBI Governor's announcement of the rate hike, which was broadly in line with market expectations. Benchmark index Nifty50 fell to the odd levels of 18560 in intraday trade and struggled throughout the trading session. The penultimate hour triggered a sell-off that dragged the index lower towards the sacrosanct 18500 support. After all the hustle, Nifty ended the day down 0.44% in red, settling just above the 18550 level. The Indian stock market started on a flat note on December 8, 2022, trailing the mixed global cues, with the benchmark Nifty50 index experiencing slight range-bound movement throughout the trading session. The index managed to hold its key support at the weekly decay, showing the resilience of the bulls who don't give up easily. Amid the intense tug of war, Nifty ended the day up a mere 0.26% and settled just above the 18600 level.

NIFTY BANKNIFTY: STRONG SUPPORT& STRONG RESISTANCE LEVEL

Nifty Spot closed this week at 18496 versus a close of 18696 last week. The put-call ratio is down from 0.94 to 0.76 on a weekly basis. The annualized cost of carry is positive at 8.59%. Nifty futures open interest declined 1.91%. For short-term traders, the 20-day SMA (simple moving average) or 18450 would act as a sacrosanct support zone, above which we could expect a rally with a pullback to 18700. On the upside, further sell-off to 18300-18200 is possible below the 20-day SMA or 18450.

TECHNICALLY SPEAKING

Finally, the markets took a breather after the recent unrelenting run. The Nifty lost just over a% from week to week. With some heavyweights pressing the last day of the week, Nifty was on the brink of collapse; but luckily the bulls managed to defend their territory in the end. Now, looking at the daily timeframe chart, the Nifty is now sitting slightly above the key 20-day EMA support, which coincides with the previous swing high of 18450. Therefore, we remain bullish as long as 18400 18300 is not breached on a closing basis. Until then, any interim decline should be construed only as a profit booking before the uptrend resumes. On the other hand, 18650 18700 are the levels to pay attention to. The moment Nifty tops that, brace yourself for another 19000 milestone in the near future. Traders are advised not to get carried away by such small dips. Rather, it is better to focus more on thematic movements, especially from the broader end of the spectrum. The Nifty MIDCAP 50 Index has performed a precise pullback to its breakout point, so we won't be surprised if more opportunities arise in this area.

Future outlook

After the great move of the past few weeks we saw some consolidation on the last day of the week with some sharp profit taking pushing the index towards 18400. However, due to a rally in the last hour we ended the week slightly below 18500. During the week Nifty saw some profit booking; while the banking index outperformed and also added decent longs. The next accumulation of positions is visible in the 18400-18500 put strike, indicating near support for Nifty. On the upside, a decent stack of OI concentration is seen around 18600-18700 call strikes, suggesting medium resistance. The PCR-OI has fallen to 0.76, which means the market is approaching oversold territory. Stronger hand-turned net sellers this week and they also exited longs and added shorts causing the long short ratio to cool further to 58% from 66% on a weekly basis. However, the data point above does not indicate any sign of concern, so we would recommend traders to take advantage of intraday declines to add new long positions to the system.

Derivatives View

The Nifty Current Months futures contract closed at a premium of 87.05 versus a premium of 116.45 points from its spot the previous week. Next month futures are trading at a premium of 202.30 points. After the great move of the past few weeks we saw some consolidation on the last day of the week with some sharp profit taking pushing the index towards 18400. However, due to a rally in the last hour we ended the week slightly below 18500. During the week Nifty saw some profit booking; while the banking index outperformed and also added decent longs. The next accumulation of positions is visible in the 18400-18500 put strike, indicating near support for Nifty. On the upside, a decent stack of OI concentration is seen around 18600-18700 call strikes, suggesting medium resistance. The PCR-OI has fallen to 0.76, which means the market is approaching oversold territory. Stronger hand-turned net sellers this week and they also exited longs and added shorts causing the long short ratio to cool further to 58% from 66% on a weekly basis. However, the data point above does not indicate any sign of concern, so we would recommend traders to take advantage of intraday declines to add new long positions to the system.