Market analysis for next week
- The Shareholder
- Aug 21, 2021
- 4 min read
Updated: Aug 25, 2021
We couldn't cover market analysis for the last two weeks because of busy schedule. We are starting it again from this week onwards.
In the last week, Nifty has made a new high of 16700 and after that we have seen a dip of 350 points because of FED and Geopolitical issue. Nifty is down by 0.5% and BankNifty is down by 3.2% in last week.
Before starting with Nifty and BankNifty analysis, we should have a look at India Vix index chart. This is volatility index chart and if it rises, then it depicts increasing fear in the market.
Vix after the downtrend was consolidating for few weeks and yesterday it has given a breakout above resistance line. Vix might rise in the short term, which means there will be an increase in fear in the market. Traders/Investors should be cautious now unless this Vix closes below resistance line (13.9). As of now, one should forget about Buy on Dips market and put strict stoplosses on all the positions.
Now let's see what can happen in Nifty, BankNifty and broader market for next week. Some charts of the constituents are also shared at the end as a bonus for all the readers, so read until the end.
We won't be looking at weekly chart as the support is currently far from current market price.
Nifty weekly support is 13600 and BankNifty weekly is 29000.
Nifty
Daily time frame chart:
Nifty is trading in uncharted territory as of now and way above demand zone. Crucial Demand zone for Nifty are (15900-15980) and (15350-15450). This zone is good for short-term traders to watchout as a support for Nifty. If Nifty approaches these levels and if we see reversal or bullish candle, then one can initiate buy position for the short term.
Fibonacci Retracement
If we consider uptrend from 14150 to 16700, then crucial support levels can be at 23.6% and 38.2% levels, which are 16092 and 15721 levels, respectively. If Nifty breaks and closes below any of these levels, then one can expect lower levels as well, unless Nifty closes above the breakdown level.
It's better to wait and watch instead of panicking or taking random action. Plan a fix stoploss for all the holdings and exit the stocks if stoploss gets hit. Now, smallcap and midcap stocks are not performing but the Nifty 50 and its major constitutents are performing. This is index management, which was seen in 2018 as well. Keep stoploss so that you don't get trapped in your holding for long term.
BankNifty
Daily time frame chart:
BankNifty has given a fake breakout and now it is stuck in a new supply zone (36330-36480) and demand zone (33900-34100). If it breaks supply zone, then we can see good upmove in BankNifty Index. If BankNifty comes near demand zone and if it forms bullish or reversal candle, then it would be a good time to add banking stocks.
Fibonacci Retracement
If we plot Fibonacci retracement from 30400 to 36320, we get some crucial support levels on downside. Currently, BankNifty is trading near 23.6% support level, which is 35033. If this breaks, then next support would be 38.2% which is 34058.
Some sectors that are looking good for short term and positional trades are:
Nifty Bank
Nifty Financial Services
Nifty Private Bank
As of now, finance and banking sector didn't contribute much to the Nifty upside, so can we expect these sectors to take Nifty up now?
Let's see some chart of Nifty 50 and BankNifty constituents.
City Union Bank (weekly chart):
Fibonacci Retracement levels can act as a support for a stock in uptrend or downtrend. CUB is trading at 61.8% level and is offering good opportunity to positional traders now.
SBILIFE (daily chart):
SBILife is a strong stock in life insurance sector as of now. Currently, stock is trading near support levels that are formed by the resistance line and is offering good risk reward for the traders.
Disclaimer: I am sharing these charts only for study purpose. One can track these stocks for short-term perspective. Plan your trade with proper stop loss and target and then take action.
Also, if you have any chart that we can track, then share it with us in the comment section.
Conclusion:
Market is giving cautious signal because of rising India Vix. Nifty is trading in uncharted territory. It's time to follow stoploss for all positions. Better to wait for reversal signal near support for any stock or indices.
One can learn this simple art of Technical Analysis by reading following blogs and practicing daily.
Readers can checkout and read first three blogs of Technical Analysis here:
Thanks for giving your precious time in reading this blog. I hope I have added value to your market analysis for next week. Like and share with others too if we can create value for others.
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