DeepDive Week 8, 2025: Midcaps and Smallcaps bounce from technical lows. Silver looks all set to shine. Hang Seng breaks out.
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Week 8: 17th-21st February, 2025
“The week opened with the tariff hangover of the previous week as Nifty made a new low of 22725 on Monday i.e. 17th February. The selling pressure seems to have reduced, but Nifty closed the week in the lower range that suggests that in the coming week, Nifty may test new lows. ”
Unlike the previous week when Trump was the highlight, this week, his close aide Elon Musk gave jitters to Indian passenger vehicle manufacturers. Tesla is planning to launch it’s EV cars and the Indian Government is now considering to slash the import duty from current 110% to 15%. If this happens, the Tesla Model 3 can compete directly in the price range of Rs. 30-35 lakhs. What do you think will happen to ‘Mahindra&Mahindra’ stock price as it has recently created hype with two new EV car launches, in the same price range? Find that out on the technical chart of M&M.
In the last DeepDive post, we’d talked about the global institutional money exiting from Indian stock market to chase safer options like US Debt instruments, USD (currency) and Gold/Silver (precious metals). This week too saw a similar trend. Even though USD saw a marginal cooling off on the charts, Gold remained bullish, inching towards higher territories.
There’s another precious metal that looks very bullish on the charts, Silver. Hold on, before we analyse it in greater detail, let’s look at the market breadth find some clues for the upcoming week.
Market Breadth
Stocks trading above 200DMA: saw no improvement from previous week as only 18% stocks are trading above its long term average (200DMA).
Stocks trading above 21DMA: saw marginal improvement as it improved from 8% (previous week’s close) to now 12%. This can be categorised as a technical bounce from oversold territory in short term i.e. when stocks trading above 21DMA hit a single digit.
The overall market breadth remained deteriorated during the week as majority stocks trade below their short/mid/long term averages. We will analyze the major Indices in our next section, to corroborate with the data on market breadth.
Here’s a reminder - ‘nothing great happens when indices/stocks trade below 200DMA’.As per our Trading Rules, that are based on the experience of world’s legendary traders, when the major indices are trading below their long terms moving average (200DMA), it is a No Trade Zone for swing/positional traders. We had discussed about this ‘Rule’ more at length in our earlier Week-4 DeepDive post (click here to read).
Analyzing Major Indices
Charts are made from the action and reaction of buyers and sellers in the market. A close analysis is needed to understand what’s really happening. Let’s find out what transpired during the week in the following major Indices:
NIFTY50
NIFTY MIDCAP
NIFTY SMALLCAP
Nifty50 Index: Price Chart on daily timeframe. (Source: TradingView).
Nifty is currently trading below all it’s key moving averages (21, 50 & 200DMA) in a ‘Down-Trending Channel’. The week opened with the tariff hangover of the previous week as Nifty made a new low of 22725 on Monday i.e. 17th February. The selling pressure seems to have reduced as the market trades in oversold zone, but Nifty closed the week in the lower range of the week’s price range. This is in continuation of Nifty’s downtrend, making lower lows and lower highs.
What does this suggest?
In the coming week, Nifty is more likely to test new lows.
Nifty MidCap Index: Price Chart on daily timeframe. (Source: TradingView). Currently trading below it’s 200DMA(yellow). Index shows a positive price action during the week, as it rallies higher after making a new low. The technical rally faced rejection from 21DMA (blue) but still managed to give a closing higher than previous week, i.e. performed better closing than Nifty50. This technical rally from oversold zone is also supported by data discussed in Market Breadth section of this post, as stocks trading above 21DMA improved from 8% to 12%.
Nifty SmallCap Index: Price Chart on daily timeframe. (Source: TradingView). Currently trading below it’s 200DMA (yellow). Index shows a positive price action during the week, similar to Midcap Index.
There is only 1 Sectoral Index which has managed to close ‘above’ the 200DMA:
NIFTY FINANCIAL SERVICES
Nifty Financial Services Index: Price Chart on daily timeframe. (Source: TradingView). Currently trading above 200DMA (yellow line).
Nifty IT Index: Price Chart on daily timeframe. (Source: TradingView). For the first time during this correction, Nifty IT index has closed below its long-term moving average (200DMA - yellow line).
Where’s the Action this week?
Hang Seng Index: Price Chart on ‘weekly’ timeframe. (Source: TradingView).
HANG SENG gains +3.79% during the week!
We’d covered the technical analysis of Hang Seng index in our previous DeepDive post, where we also highlighted it’s outperformance vis-a-vis Nifty50. This week the Index has managed to finally breakout above it’s resistance zone and give a closing above it. That’s a big positive!
Silver Futures Index on MCX: Price Chart on ‘weekly’ timeframe. (Source: TradingView).
SILVER
Silver Future on MCX is trading in a higher range of ‘base on base’ consolidation pattern. Previous time it broke out was after 190 weeks long i.e. multi-year consolidation.
Will it breakout from this 40 weeks long base? Will Silver hit the 1 lakh mark?
If the volatility remains high in the global markets, Silver will follow it’s mother chart i.e. Gold! Both the precious metals are likely to shine when the global money chases safety amidst high volatility. Chart look all set to fire up. Coming weeks can be really interesting for the precious metals. Keep an eye Traders!
HOMEWORK EXERCISE: Compare the returns of Gold and Silver in the last 1 year, 3 years and 5 years.
WHERE SHOULD YOU FOCUS AS A TRADER, IN THE COMING WEEKS?
As per Trader Hikes’ Rule (THR), no fresh trading position is to be initiated as long as major indices are trading below 200DMA. No sustained move is expected till then, rather it can do more damage by multiple chops. Risk Management is our priority!
Build your Watchlist of Stocks: Stay on the sidelines, and focus on building a watchlist of stocks. How can you find that?
Stock which are trading above 200DMA, preferably above 50DMA, are the ones where you should focus. When the Indices improve and resume the uptrend, these are the stocks that can likely give a solid runup.
Find leading stocks from leading sectors/themes. For clue, look for sectors trading above 200DMA, and find the top stocks from these sectors. Build a Watchlist.
If the major indices improve in coming week(s), you can likely find low risk-reward entries in these names from your watchlist. Always stay where strength is! Just wait for the overall environment to turn favorable, before you hike!
That’s a wrap! See you in the next week’s Deep Dive hike.
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