Nifty Tomorrow: Prediction, outlook and Nifty Trend for 27th Jan 2022

Medium Term Trend:👈👉 (Sideways)

Nifty @ 17275- Crashed 1300+ points in 6 days.

In last update, we had shared that we saw two possibilities emerging from here ' A- market makes a V shape recovery and shoots above 18500 levels or B- mkt consolidate between 17400-18500 levels for few more weeks' We had also mentioned that the other scenario where market fall below 17K level is our least preferred scenario and in case it happens we will relook at our options.

As it played out, our analysis was proved wrong & Nifty weakened below 17400 levels yesterday, tested 17K levels and today it even broke below 17K levels (though temporarily) before staging some sort of recovery and closing around 17300 levels. But now since market has convincingly broken below 17400 levels, its important that we re-analyse the whole scenario in the new light.

Fall we have seen in last few trading sessions has been pretty sharp with VIX rising sharply. Domestic (budget/elections), Global (Fed meet) & Geopolitical (Ukraine/Russia) events have taken center stage and playing out with the markets & traders sentiment. However inspite of such a brutal fall, we still would like to stick with our second option (i.e, option B- range bound trade) though with a revised range.

For now it appears market wants to trade in a sideways range (between 16500-18500 on a larger scale and 17000-18000 on a slightly smaller scale). We had previously noted ( ref  Nifty 20th Dec Update) that fall from 18500 to 16500 was extensive and broad based & its not uncommon to see market going in for an extended period of consolidation post such moves. So we wont be surprised to see market moving in this range of 1000-1500 point for few more weeks. 

Moving forward, it is likely that markets more or less has priced in these events, and unless global situation deteriorates severely, we do not see sustainable fall below 16700 levels. There could be flash trades (like today) but eventually market should be able to move from there. Moving above key resistance of 18000-18500 however will take some doing and wont be easy.

In Summary, inspite of the carnage we have seen in last 6 days, we maintain our 'Neutral' stance & not turning bearish yet. From trading perspective it makes sense to sit out for some time (or trade with light quantities). Scenario is likely to become clearer in coming trading sessions.

 Happy Trading!