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Below the Quote on Weekly Market Outlook for the week starting November 11 by Lovelesh Sharma, Consultant, SAS Online - a deep discount broker

Nifty ends below the 20 MA for the third consecutive week, shedding gains following the US election results. The elections caused significant volatility, with Nifty breaching the highs and lows of the previous week’s inside-day candle and now forming an outside-day candle, indicating expansion in price action. This overall range expansion encountered selling at the higher levels of 24,500 to 24,550, marking a critical resistance for bears.

Breadth analysis suggests that a bottom formation has yet to emerge, though a relief rally cannot be ruled out due to the market's oversold condition. The number of stocks above their short-term moving averages remains low, with more than 50% of stocks below their 20 and 50 MAs. Additionally, the percentage of stocks holding the crucial 200 MA has declined to 55% from over 70% a month ago. The net new highs and new lows indicator remains muted, pointing to a sluggish short-term phase.

On a lower timeframe, RSI has rebounded from oversold levels, forming a bullish divergence as Nifty hits new lows while RSI moves above 40. ADX is trending higher at 36, indicating a strong underlying trend velocity.

We believe Nifty is at an inflection point at 23,900, a level that could trigger selling pressure to lower targets of 23,480 – 23,200 if breached. However, holding above this level could maintain a range of 23,900 – 24,500. On the upside, 24,500 remains the key resistance level, as a break above it would likely trigger short covering.

Nifty's OI data suggests a broader range of 23,800 – 24,500, while the short-term range is likely between 24,400 – 24,000 for the upcoming expiry. An IV crush following the event indicates a low volatility environment for the Nifty index. BankNifty futures also display price expansion with an outside-day formation and appear to be within a range of 51,400 to 52,300. OI concentration at 52,400 indicates short build-up, while a close below 51,500 would likely trigger selling pressure to lower levels. With weeklies ending, we anticipate a regime change in Nifty and BankNifty in the coming month.

We remain cautious and advise using resistance levels to align with the trend in the short term.

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