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 path of downward spiral or an uptrend? Experts decode movement based on what technical charts suggest!   

On Friday, broader market NSE Nifty50 ended at 18,105.30, down 85.70 points or 0.47 per cent while S&P BSE Sensex closed at 60,840.74, down 293.14 points or 0.48 per cent. On weekly basis, the benchmarks ended with gains with Nifty50 higher by 1.74 per cent according to expert Amol Athawale, Deputy Vice President - Technical Research at Kotak Securities.

The markets may continue to remain volatile and may trade with a downward bias in the immediate term, Joseph Thomas, Head of Research at Emkay Wealth Management said.

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

“The daily chart shows that a rising trendline is acting as a resistance along with the key DMAs. Thus the index can witness a short term consolidation in the range of 17800-18400,” Ratnaparkhi further said.

The Nifty registered a new all time high on December 01 2022 and entered short term correction phase thereon. The index corrected for 3 consecutive weeks post which it witnessed some relief in the last week of December 2022 as it received support near the 20 WMA (Weighted Moving Average), Ratnaparkhi said.

However, Amol Athawale, Deputy Vice President, Technical Research at Kotak Securities has a contrary view. He sees an upward movement in Nifty amid formation of a bullish candle on weekly charts and higher bottom formation on daily and intraday charts. He said that the above formations indicate further uptrend from the current levels.

For trend following traders now, 18000 for Nifty and 60500 for Sensex would act as a sacrosanct support zone above which, the index could move up till the 50 day SMA (Simple Moving Average) or 18300/61400, Athawale said.

“Further upside may also continue which could lift the index till 20 day SMA or 18400/61750. On the flip side, fresh selloff is possible only after dismissal of 18000/60500, below which the market could slip till 17800-17750/59800-59600 levels,” he added.

Thomas of Emkay said that US Federal Reserve monetary policy may have had an impact on the global growth and the reports emanating from China have been factors that are of consequence to the markets.

Once the short term consolidation phase is over then the index will be set to resume its larger uptrend can can head towards the all time high of 18887 in the next couple of months, Sharekhan’s Ratnaparkhi said.

The equity markets remained volatile throughout the trading session on Friday. The gainers were metals, real estate and PSU Banks while power, banking and FMCG stocks traded lower.