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Nifty50 Hits All-time Record Highs; So What’s Next?

August 16 2021 | Reading Time: 10 Minutes
In our monthly report published on August 06, we had mentioned, “We expect sustainable trading above 15,900–15,950 may lead this index toward 16,500–16,600 levels in the next few weeks.” The index has moved per our expectations and closed at an all-time high above 16,500.

The index started on a positive note and gained 1.79% in the weekly basis. It protected the low of the previous week and formed a bullish candle along with a higher-high, higher-low price structure on the weekly chart. The past two weeks made a great show in terms of price action where the index successfully crossed the consolidation zone of 15,450–15,900 in which it has been trading for the past eight weeks. The momentum indicator RSI moves sharply in a northward trajectory, sloping upward along with a positive bias. Similarly, weekly MACD has turned positive after almost 20 weeks and is now trending with a positive crossover on the weekly chart. Apart from RSI and MACD, the index is trending above all long-term key moving averages on the weekly chart.
Likewise, an analysis of the daily price action this week was up to the mark, especially because of the last two trading days. The index has been positive throughout this week, registering the major gain on Thursday (0.5%) and on Friday (+1.01%), which turned market sentiment to the positive side. The index came out of five trading days in the consolidation zone 16,160–16,375 on Thursday and even closed higher, at 15,529, on Friday by crossing all resistance. Currently, the index is trending in uncharted territory above its all key moving averages on the daily chart, with a positive bias. Various leading technical indicators like RSI and MACD are suggesting a positive bias.
On the derivative data front, for the monthly contracts expiring August 26, the PCR stands at 1.83. Further, monthly option data indicates maximum Call OI stands at 16,000 strikes, which are 51.15 lakh contracts, followed by 31.41 lakh contracts for 17,000 strikes. The maximum Put OI stands at 15,000 strikes, followed by 16,000, which are 76.06 lakh contracts and 71.16 lakh contracts, respectively. Further, volatility measuring index “INDIA VIX’’ reaching 12.99 indicates bullish undercurrents in the overall market. Further, as per the O’Neil Methodology of market direction, the market is currently in a “Confirmed Uptrend” with three distribution days in the last 25 trading sessions.
All the above technical parameters, along with derivative data and O’Neil Methodology of market direction, indicate that the index is trading in bullish momentum and there is no sign of weakness on multi-timeframe charts. Our bias would be positive as far the index holds above the 16,150–16,100 mark and then might move towards 16,800 in the coming week(s). However, we advise our subscribers to be cautious at higher levels as some profit booking cannot be denied at higher levels.
Further, the interesting part is that, after almost 10 weeks of consolidation, Bank Nifty is now showing participation in the market by trending upward, which helped Nifty50 accelerate on the higher side. However, profit booking in the broader market is a matter of concern.
FII/ DII Activity in the Second Week of August

Current Status of Major Sectoral Indices - Per O’Neil Methodology

Current Status of Major Global Indices - Per O’Neil Methodology

SWINGTrader India performance chart

Major Economic Events
Major Economic Events
August 16, 2021 WPI Food YoY JUL
August 16, 2021 WPI Fuel YoY JUL
August 16, 2021 WPI Manufacturing YoY JUL
August 16, 2021 WPI Inflation YoY JUL
August 16, 2021 Passenger Vehicles Sales MoM JUL
August 20, 2021 Foreign Exchange Reserves 13/AUG

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