In our previous weekly note, we had mentioned about the possibilities of the market consolidating and at the same time showing resilience compared with its global peers. While trading on expected lines, what the market put on display all through the week was classic consolidation.

The market remained volatile, but remained within a capped range and kept recovering from the lows, showing resilience which demonstrated continuing buoyant undercurrent. The Nifty50 ended the week with net weekly gains of 83.45 points, or 0.80 per cent. Going into the expiry week, we expect this consolidation to continue.

While Nifty is still facing resistance at the pattern resistance area on the daily charts, it remains overstretched and it would be no surprise if there are bouts of corrections at higher levels. The market is still not completely done with the consolidation and minor corrective moves should not come as a surprise to anyone. The 10,610 and 10,690 levels should act as resistance for the Nifty50 in the coming week and supports are expected to come in at 10,580 and 10,375 levels. The Relative Strength Index or RSI on the weekly chart stood at 57.1979.

It continued to remain neutral, showing no divergence against price.

The weekly MACD remains bearish and it is trading below the signal line.

No significant formations were seen on the candles. Pattern analysis shows Nifty remains comfortably in the 27-month-long upward rising channel.

Despite a minor downward breach a couple of weeks back, the index has managed to crawl back into the upward rising channel once again. Next week, we will once again see attempts by the market to move out of the consolidation range and inch higher.

However, higher levels may not come easily and we might see some good volatility.

NIFTY PCR (Put-Call Ratio) remains at a slightly uncomfortable level.

With consolidation imminent, we advise investors to vigilantly protect profits at higher levels. While select purchases can be made, profits should be protected religiously with every upward move in the coming days. A study of Relative Rotation Graphs shows IT arrested the loss of momentum and relatively outperformed the broader market.

Broader indices such as CNX100, 200, Nifty Next50, and Nifty Mid50 continued to show improvement in relative momentum against the broader market and this is likely to be seen in the coming week as well. We can also expect stocks from auto, FMCG, energy and financial services to improve their relative performance.

Select stocks from metals and realty segments should see selective outperformance.

Apart from this, Bank Nifty, PSU Banks, CNX PSE and pharma are not expected to put up any major outperformance. Important Note: RRGTM charts show the relative strength and momentum for a group of stocks.

In the above chart, they show relative performance as against the Nifty50 and should not be used directly as buy or sell signals. (Milan Vaishnav, CMT, MSTA is Consultant Technical Analyst at Gemstone Equity Research Advisory Services, Vadodara.

He can be reached at This email address is being protected from spambots.

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