Last Week

Markets continued their sell-off, this week with newfound power over fears of a mutation of the Covid-19 virus.

NIFTY opened the week nearly flat at 17,796 and fell sharply on Monday. In the next three days, the market showed signs of stabilising. But Friday saw another big crash. NIFTY closed the week at 17,026, down 770 points or 4.32% for the week. 

BANK NIFTY also followed the rest of the market by falling. The index opened on Monday with a small gap-up at 38,232 and fell. When everyone thought support would be found at the 37k mark, the index opened below it on Friday and crashed further. BANK NIFTY closed the week at 36,025, down 2195 points or 5.74% from Monday’s opening.

All sectoral indices except NIFTY PHARMA which was boosted by the Covid fear. NIFTY AUTO(-8.5%) was the most affected sector. 

Midcap and smallcap stocks also suffered in the week, even though smallcap index fell less than the midcap and large-cap indices. 

Reliance showed strength and closed in the green for the week with the 6% jump on Thursday.

Our markets and other global peers fell sharply after new restrictions were announced by governments in reaction to the new virus mutation. You can read more about the fall here.

Oil prices saw a sharp fall on Friday and are down nearly 10% this week. WTI Crude prices are at $68/barrel, a 20% fall in two weeks.

Foreign Institutional Investors(FIIs) have net sold a heavy Rs 21,000 crores worth of equity shares in the week. Domestic institutional investors(DIIs) could not keep up but bought Rs 11,000 crores worth of shares during the week. 

Week Ahead

Countries have started banning flight services from the affected regions including Botswana, South Africa and Hong Kong. But it is too early to conclude that the new variant will have adverse impacts as the world worries.

In between all this, if the U.S. Federal Reserve reduce economic support at a faster rate, FIIs would sell more as they are doing now. Money may also fall to Chinese markets as there is an expectation that the government there may ease policies.

There are three IPOs lined up this week: Go Fashion, Star Health(backed by Rakesh Jhunjhunwala) and Tega Industries. Will be interesting to see how they perform in the bearish market scenario.

SGX Nifty closed in the red yesterday, at 16,882.

NIFTY has supports at Supports: 16,915, 16,880, 16,850, 16,720, 16,610, and 16,500. There are resistances at 17,100, 17,200, 17,325 and 17,450.

BANK NIFTY has supports at 36,000, 35,700, 35,500, 35,300 and 35,000. Immediate resistances to watch out are 36,500, 36,650, 36,800 and 37,000.

In NIFTY, open interest data for the monthly options indicate heavy call buildups everywhere, indicating bearishness. There is high call option writings at 17,500 and the largest put option writing is at 17,000. 

The highest call OI build-up is at 37,000 and the highest put OI Build-up is at 35,000.

Current technical analysis indicates support at 17,000 with Fibonacci Retracement level here. The next support at 16,700 will be at the 10% fall mark from all-time highs for NIFTY.

Foreign Institutional Investors(FIIs) continue to be heavy sellers. Most European countries have expanded Covid-19 booster vaccination shots and tightened restrictions overnight. How do you think NIFTY will open tomorrow morning? Let us know in the comments section down below!