Week Ahead

The bear attack in last three trading sessions has wiped out all the previous week's market gains and benchmark indices ended with more than 1.5 percent loss for the week ended September 16. Rising expectations of aggressive rate hikes from the US Federal Reserve in the upcoming policy meetings to tame inflation, spike in US dollar index and bond yields, and selling by foreign institutional investors (FIIs) pulled down the market.

The BSE Sensex plunged more than 950 points to 58,841, and the Nifty50 fell a little more than 300 points to 17,531, while the Nifty Midcap 100 index fell 1.7 percent and Smallcap 100 index slipped 1.2 percent.

Volatility and consolidation are expected to continue in the coming week, with focus on the Federal Reserve policy meeting and global cues, in the absence of domestic cues.

Technically Nifty50 has seen formation of Dark Cloud Cover if we see the candlestick patterns of the last three trading days, while there was Bearish Engulfing kind of pattern formation on the weekly scale. Also the index has seen a breakdown of support trendline adjoining lows of August 29, September 7 and September 14.

Nifty is currently placed at the support of 17,450-17,500 levels, which is previous swing lows and also a trend line support (connected from previous higher bottoms). This support is expected to be broken on the downside soon.

The formation of bearish candlestick pattern on daily and weekly charts indicates more weakness ahead for the market. The next lower levels to be watched are around 17,200-17,150 in the next couple of weeks. Any upside from here could find resistance around 17,700 levels.

The Option data indicated that the Nifty50 may move in the range of 17,300-17,800 levels in the immediate term, while the broader trading range could be 17,000 to 18,000 levels.