In the week ending January 24, Nifty fell by 048% and traders seemed trapped in the whirlpool of uncertainty. Actually, the market could not indicate any definite direction. The index, which was hovering in the same range as last week, has moved with signs of uncertainty and bearish sentiment still seems to be dominating it.
Technically, the index is inside the 10-day EMA (exponential moving average) and facing strong resistance at 23,300–23,400 levels. This development points towards the decreasing influence of bullish forces. At the same time, it also paints a picture of a risky short-term outlook.
The trading range of 23,400 to 23,000 indicates a tug-of-war between bulls and bears and both sides actively strengthening their positions in the options market. Macroeconomic concerns may also play a role in further weakening the market sentiment, of which the US tariff dispute, trade policy and upcoming decisions of the Federal Reserve are important. The effect of profit booking after every market rally is clearly visible and the indices are trading below the major moving averages, hence the outlook looks a bit dull.
Open Interest (OI) Trends: Bearish Tone
Nifty Futures OI increased from 1.732 crore shares to 1.963 crore shares i.e. a huge increase of 23.1 lakh shares. The 0.48 per cent rise in the index and sharp increase in open interest suggest that bearish traders are doubling their short positions. The increase in open interest confirms the continuation of the bearish trend, while sentiment remains overall weak.
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