Share Market Weekly Technical Report – January 27, 2023

Future outlook

For the fourth consecutive week, we had a promising start on Monday, and it appeared as if we are going to finally come out of the recent congestion zone in the upward direction. Unfortunately, mostly market tries to deceive us and this time too, it caught most of the traders on the wrong foot. On Wednesday, some unpleasant news related to Adani group triggered the selloff in the banking counters, which augmented on Friday as well. In fact, the entire Adani conglomerate just plummeted like a bottomless pit. In this process, we not only thrashed 17750 but also went on to hasten towards the 17500 mark. Eventually, with some modest recovery in the end, the Nifty concluded the dreadful week at 17600 by shedding over a couple of percent on a week-on-week basis.

In the coming week, the Finance Minister is going to present the Union budget and mostly, market prepares itself for this mega event. This time, the fiasco in last two days has dampened the overall sentiments and certainly disrupted prices across the board. From an optimist point of view, it’s good that the market is approaching this event on a lightener note and any favorable outcome, would lift the markets higher. On the other hand, a slight disappointment would lead to further aberration in the market. Let’s see how things pan out going ahead. Looking at the daily chart, we can see prices gyrating in a ‘Falling Wedge’ pattern and have managed to retrace back to the lower end at the close. Considering the ‘Positive Divergence’ in ‘RSI-Smoothened’ oscillator, we may expect some recovery from lower levels.

As far as levels are concerned, 17500 is to be treated as immediate support and a slide below this would extend the correction towards the ‘200-day SMA’ level of 17300 – 17200. If this happens then investors / traders are advised to start nibbling into quality propositions. On the flipside, 17700 – 17800 are to be seen as strong hurdles. If market has to regain strength as well as confidence, Nifty needs to surpass 18000 on a closing basis. Traders are advised to keep a note of all the above scenarios and should ideally remain light ahead of the event.