Weekly Market Outlook for 2 Jan to 6 Jan

The nifty started the December series with a negative note and continued the downside move consecutively for the third week in a row. The prices were dragged more than 1000 points from the all-time high of 18887.60 to 17774.25, but in the last week of the month, nifty showed a good pullback from the bottom and managed to hold above 18000 levels with 1.68% weekly gains. While the Banknifty has corrected more than 2500 points from an all-time high of 44151 to 41569 levels, after that some short covering has been witnessed in the last week of the series and it has recovered sharply with 3.1% gains, closed at 43000 marks on the last trading day of the month and year too.

Nifty Today:

The nifty rollover was at 74%, lower than the previous month and also below the average of the past five months. On the expiry day, the highest put writing position was at 18000, followed by 17500 while on the CE writing exposure lies at 18200 & 18500 strike prices. 

Sectorally, PSU Baskets continued to soar, adding 11% gains, followed by Metal, Realty and Media gaining 7.9%, 5.3% and 4.2% each, while Nifty Pharma & FMCG were the laggards for the week. On the stock front, the top weekly gainers were IBULHSGFIN with 7.7% gains, followed by TATASTEEL, TITAN and JSWSTEEL with average gains of 4% over a week. While the top weekly losers were majorly from the Pharma & FMCG sector, like CIPLA, DRREDDY, HUL, BRITANNIA & UPL etc. 

On the daily chart, the nifty has reversed from the immediate support but still finding resistance at 18200 mark as it is a most important level to watch out further because the maximum pain has been noticed at this level only. As per Fibonacci Retracement, 38.2% is at 18200 and the highest writing is also at the same level. Moreover, on Friday session, the nifty also formed a Dark Cloud Cover candlestick pattern that suggests weakness for the near term. The price also moved below 50-days EMA on the daily timeframe. 
 

The benchmark index recovered well but ended tad below 18200

So, based on the above aspects, traders are advised to avoid aggressive positions until nifty close above the 18200 mark. Once the index close above it, we can expect an upside direction towards 18350/18500 levels. However, on the downside, if nifty moves below 18045 levels, it can test 17900 and 17700 levels.  

Nifty & Bank Nifty Levels: