Nifty Technical Outlook: Markets Likely To Stay Volatile This Week

Overall, the NIFTY remained more or less flat last week, forming a Doji Star candlestick pattern on the weekly charts. Despite the flatness of the NIFTY, we witnessed gains in the top 10 shares by market capitalisation, with seven of them adding nearly 54K Crore in market cap.

The present week is expected to be volatile, with the GST council scheduled for Saturday, and the F&O expiry due on Thursday.

There are two important takeaways on the technical front from last week. One, momentum-wise, we are firmly in the overbought zone both on the daily and weekly charts - and it follows from the dual momentum timeframe theory that the short time upside is definitely capped at this point, with a very high probability of a correction over the next few weeks. The second key takeaway is the beginnings of a very slight upward tilt in the middle Bollinger Channel. This may (mind you, this is highly speculative at this point!) signify that the broader trend will be turning moderately bullish, meaning that the NIFTY could find strong support at the middle band - which may be around the 10,600-odd mark by the time the index intersects with it.

Broadly speaking - we're looking at a correction at this stage, with the next immediate medium-term support level being roughly 450 points from the current levels. Plenty of volatility on the cards, though.