Nifty Weekly Chart – Elliott Wave Analysis
Target: 19710-19970, and then (+/-) 15500
Based on our Elliott Wave analysis of Nifty, it appears that it may still be undergoing a “running” corrective wave since 2021-October.
Currently, we lack sufficient data and confidence to indicate the initiation of a new Impulse wave in Nifty from 2023-March or 2022-June.
We are closely monitoring Nifty’s “resistance” area of 19710 – 19970. According to our Elliott Wave outlook, we anticipate a potential stall in Nifty’s progress within this range.
Will Nifty continue its rally and reach the 19710 – 19970 area? We tend to believe so.
It is worth noting the institutional transactions in the cash market (see below), as they contribute to the positive market sentiment. Recent data from NSE cash segment “transactions” on Friday, 2023-06-30, shows unprecedented activity not witnessed since 2023-February. These figures suggest that even retail participants are gradually increasing their presence in the market.
If Nifty indeed encounters resistance around 19710, our current Elliott Wave outlook will remain unchanged.
However, should Nifty surpass 19710 but face resistance around 19970, we will make a slight adjustment to our internal Elliott Wave count, while still maintaining the belief that Nifty is in a “running” corrective wave.
We will revise our Elliott Wave outlook only if and when Nifty surpasses the 19970 level. Until then, we will adhere to the prevailing trend.
What will happen if Nifty does stall within the 19710 – 19970 range? In that case, we anticipate a gradual correction towards the lower range of approximately +/- 15500 (indicated by the dashed blue trendline in the image above), aligning with our “running” corrective wave narrative according to the Elliott Wave theory.
Nifty Weekly Chart – Ascending Triangle chart pattern
Target: (+/-) 22500
What you can observe in the chart above is not exactly what is typically defined as an ascending triangle chart pattern according to conventional sources. This is due to the presence of an upward sloping trendline that intersects at points 18600 and 19000, forming a slope of approximately 78 degrees.
However, it does bear a resemblance to an ascending triangle formation within a market that is experiencing upward movement. Furthermore, the breakout during the weekly timeframe aligns closely with what is commonly depicted in textbooks, indicated by the highlighted blue rectangle.
Should this breakout sustain itself, the target price level for this “ascending triangle” pattern would come in at around 22500, with a potential variance of plus or minus.
It’s worth noting that the range between 19710 and 19970, labeled as the EW “resistance” area, along with the ascending trendline depicted in blue dashes, may potentially act as barriers or obstacles to upward movement.
Nifty Weekly Chart – Rising Wedge chart pattern
Target (on failure of the pattern): 14500-14000
In the chart above, what you’re observing is not a strict rising wedge chart pattern, as defined in textbooks, since it is occurring in a market that is trending upward. Rising wedge patterns typically manifest in a market that is experiencing a downward trend.
Considering the recent breakout observed in the last week of 2023-June, if it turns out to be a false breakout, despite the strong influx of institutional money into the cash market during that period, we can anticipate this rising wedge to emulate a legitimate rising wedge pattern observed in a market that is trending downward.
In such a scenario, it is likely that Nifty will break its lower trendline and support level, which could potentially be around the 17800/ 17500/ 16800 area, and gravitate towards the projected “textbook” target range of 14500-14000.
Nifty Weekly Chart – Cup & Handle chart pattern
Target: (+/-) 22500
The chart displayed above appears to exhibit a visually appealing cup and handle chart pattern. The handle section of the pattern has retraced slightly over 50% of the preceding cup’s upward movement and recently experienced a breakout during the final week of 2023-June.
It is (however) worth noting that the volumes associated with the breakout are within the average range and do not stand out significantly.
The target area for the cup and handle chart pattern aligns with the target area specified for the ascending triangle pattern mentioned above, at approximately (+/-) 22500.
Nifty may encounter resistance near the EW “resistance” range of 19710 – 19970, as well as from the ascending trendline depicted in grey color.
Transactions in 2023-June by FIIs & MFs in the cash market
In 2023-June alone, the domestic institutional investors (DIIs) poured more than ₹5,664 Crores into the spot/cash market. At the same time, foreign institutional investors (FIIs) took the lead by investing ₹55,160 Crores.
Looking at the overall picture, the FIIs have already invested an impressive ₹91,816 Crores in the current calendar year of 2023.
What stands out is that in June and May of 2023 alone, their investments (see table below) have accounted for 105% of the total investments made so far this year.
Considering the same year-to-date period, it’s worth noting that the Nifty index has risen by 5.99%.
| Year-Month | ₹ Crores (FIIs) | ₹ Crores (DIIs) |
|---|---|---|
| 2023-January | -29,949 | +21,353 |
| 2023-February | -5,279 | +12,825 |
| 2023-March | +14,944 | +20,764 |
| 2023-April | +15,733 | -11,509 |
| 2023-May | +41,206 | +2,447 |
| 2023-June | +55,160 | +5,664 |
| Total | +91,816 | +51,544 |
| Calendar Year | ₹ Crores (FIIs) | ₹ Crores (DIIs) |
|---|---|---|
| 2018 | -37,030 | +117,502 |
| 2019 | +89,757 | +52,534 |
| 2020 | +174,029 | -53,664 |
| 2021 | +25,768 | +67,247 |
| 2022 | -125,633 | +184,484 |
| 2023 (Jan-Jun) | +91,816 | +51,544 |
| Total | +218,707 | +419,647 |
Also, despite the above numbers (Table 1), it’s hard for us to determine the extent of institutional interest in the remaining market since we lack information on the portion that has been invested in Adani group companies.
Therefore, we will continue monitoring the “resistance” range of 19710 – 19970 based on our current Elliott Wave analysis.
Happy trading and investing!