Weekly Market Outlook for 6 Feb to 10 Feb

The week gone by witnessed high volatility as it started with the correction due to the news flows on the Adani group. The index witnessed a high volatile session on the Budget day wherein the Nifty oscillated in the range of about 600 points, but finally the index managed to recover towards the end of the week and closed well above 17800 with weekly gains of almost one and a half percent.

Nifty Today:

The eventful week saw large swings wherein the Nifty formed a support base in the range of 17400-17350. The index has been trading in a channel since last few weeks and the low mentioned coincides with the support end of the channel. The markets recovered in Friday’s session indicating much of the negative news have now been factored in and the index seems to be heading towards the higher end of the channel. The correction in the Adani group stocks dampened the market sentiment which seems to have reached the extreme end caused by excessive pessimism. Such sentiments usually lead to bottom in the corrective phase and whether the budget day low would mark such bottom needs to be seen. The global markets have been doing well and the Dollar Index seems to be in a downtrend which are positive factors for the equities. However, the major worrying factor has been the FIIs selling as they have been selling in the cash segment and have formed short positions in the index futures segment as well. Their ‘Long Short’ Ratio has reached around 17 percent which is again near to the levels which we saw during the bottom in June 2022. If they start covering their positions from here, that would be a big positive factor for the near term. Now as far as levels are concerned, 17550 followed by 17400-17350 are the crucial support for Nifty while the higher end of the channel is around 18000. A breakout above 18000 could create a gush of buying interest which would then lead to the trended phase on the higher side.

Nifty recovers post Budget day volatility, midcap index poised at crucial support   

The Nifty Midcap100 index which indicates how the broader markets are doing is poised at an interesting support level. The index had formed a support base in the range of 30000-29900 in September 2022, December 2022 and is now currently trying to form a base in the same range. If it manages to hold this, then this will mark a ‘Triple Bottom’ and hence one should keep a close watch on these levels. The Bank Nifty too has taken support around its ‘200 DEMA’ and 61.8 percent retracement level. Till the major supports are intact, we advise traders to trade with a positive bias and look for buying opportunities.

Nifty & Bank Nifty Levels: