Stock Market Outlook: What technical charts suggest about near term movement of Sensex, Nifty?

Indian stock markets ended 2022 on a negative note amid volatility during the week. Will they continue a downward path or an upward trend? Experts decipher the movement based on what the technical charts suggest!

On Friday, the broader NSE Nifty50 ended at 18,105.30, down 85.70 points or 0.47 percent while the S&P BSE Sensex closed at 60,840.74, down 293.14 points or 0.48 percent. According to expert Amol Athawale, Senior Vice President – ​​Technical Research at Kotak Securities, on a weekly basis, benchmarks were higher with Nifty50 gains of 1.74 percent.

Markets may continue to remain volatile and may soon trade in a bearish reaction, said Joseph Thomas, Head of Research at Emkay Wealth Management.

Nifty has posted a positive weekly close, while the index has formed an outside bar and an Engulfing Bear candle on the monthly chart for December, said Gaurav Ratnaparkhi, Head of Technical Research, Sharekhan by BNP Paribas. “This shows that the index may come under pressure in the short term,” he added.

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“The daily chart shows that a rising line with major DMAs is acting as resistance. Thus the index may witness a short-term consolidation between 17800-18400,” Ratnaparkhi further added.

Nifty recorded an all-time high on 01 December 2022 and entered a short-term correction phase. The index has been corrected for 3 consecutive weeks, Ratnaparkhi said, which saw some relief in the last week of December 2022 as it found support near the 20 WMA. (Governed Movement Center), Ratnaparkhi said.

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However, Amol Athawale, Senior Vice President, Technical Research at Kotak Securities has a contrary view. It sees an upward movement in the Nifty with a significant candle formation on the weekly charts and a higher bottom formation on the daily and intraday charts. He said that the above formations show a higher rise than the current levels.

For trend following traders now, 18000 for Nifty and 60500 for Sensex will act as a sacred support zone above which, the index can rise up to 50-day SMA (Simple Moving Average) or 18300/61400, Athawale said.

“Other forces may continue that could push the index up to the 20-day SMA or 18400/61750. On the other hand, new sales are possible only after the breakout of 18000/60500, below which the market could reach the levels of 17800-17750/59800- 59600,” he added.

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Emkay’s Thomas said the US Federal Reserve’s monetary policy may have had an impact on global growth and reports coming out of China were factors affecting markets.

Once the brief consolidation phase is over, then the index will be set to resume its uptrend and could move to a high of 18,887 in the next two months, Sharekhan’s Ratnaparkhi said.

Equity markets remained volatile throughout the trading session on Friday. Gainers were metals, real estate and PSU Banks while power, banking and FMCG stocks declined.


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