Nifty's Strong Surge: What's Next for the Market?
This week, Nifty surged to 23,350, an impressive 950-point rally from last week’s close. The index hit a high of 23,402 and a low of 22,353. As I highlighted last week, I expected Nifty to trade within a narrow range of 22,850 – 21,950. However, Nifty broke out of this range, shattering the upper limit, and the resulting short covering led to a strong bullish close.
Next Week: A Critical Turning Point
Looking ahead, next week is going to be crucial. Despite the strong move, Nifty is still in a bearish phase on both the weekly and monthly time frames. However, if Nifty manages to retrace slightly to 23,000 and sustain above the 22,900 – 23,000 range, we could see the bulls taking control, pushing the market up toward 23,800/23,850.
On the other hand, if Nifty falls below 22,800, it would signal a breakout failure, which would be bad news for the bulls. In that case, Nifty could potentially drop to 22,000.
March-End Volatility: Be Ready for Both Sides
At the end of March, traders typically start booking their losses to offset gains for the financial year, creating increased volatility. This makes it an exciting time for directional traders, as we could see sharp movements in both directions.
For me, as long as the monthly and weekly charts remain bearish, I am cautious and not ready to turn bullish just yet. However, there are some sectors showing relative strength, and these could offer trading opportunities:
Nifty Energy
Nifty Financial Services
Nifty Metal
Nifty Public Sector Enterprises (PSE)
Keep an eye on stocks from these sectors, as they are currently outperforming others.
S&P 500: Mixed Signals
On the global front, the S&P 500 closed this week at 5,667, barely 30 points above last week’s close. The index has failed to sustain above the DEMA200 level at 5,705, signaling that the bulls are struggling to maintain momentum. A consecutive daily close above this level would help restore confidence among the bulls, potentially targeting 5,850.
However, if S&P 500 drops below 5,600, we could see a faster sell-off, with the recent low of 5,500 likely to come into play. It’s going to be a tense week as we await to see whether the bulls or the bears take control.
In Summary: Prepare for Volatility
Next week promises to be an exciting week for traders, as both domestic and global markets face critical levels. Directional traders should remain flexible, prepared for sharp moves in both directions. Focus on key sectors showing strength and stay vigilant for any breakout or breakdown in the Nifty and S&P 500.
