Key Points
The weekly price action formed a bear candle with a lower shadow, highlighting supportive efforts emerging in the vicinity of 16800 despite elevated global volatility...
In the upcoming eventful week, volatility would remain high wherein we expect the extended correction to get arrested around the key support zone of 16800 while sustainability above the immediate hurdle of 17200 would pave way for a meaningful pullback towards 17600 by the end of March 2023, as it is a confluence of 200 days EMA coincided with current weeks high..
Historically, over the past two decades, on all ten occasions when Nifty corrected for three consecutive months, in subsequent month index witnessed a positive returnIn the current context, we expect the index to maintain this rhythm as it has already retraced ~55% of Jun-Dec rally over past three months and gain gradually higher by the end of the monthEmpirically, episodes of such high volatility globally and domestically has been painful to deal with in short term but always resulted in a durable bottom formation over medium term once anxiety surrounding events settle down..
The lower shadow signifies the emergence of supportive efforts around key support of 38600-38200 levels despite global volatility, as the index approached key support accompanied by oversold readings (daily stochastics of 12)...
In the upcoming week, we expect the index to hold a key support zone of 38600-38200 amid high volatility surrounding the closely watched US Fed event and stage a gradual technical pullback towards 40300-40500 which is a confluence of last weeks high (40690) and 61.8% retracement of past two-week decline (41671-38613)...
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