INSUBCONTINENT EXCLUSIVE:
The week gone by was quite dismal for the equity market, as it ended in the negative for all five sessions of the week
After a failed breakout on the daily charts, Nifty fell back into the broader trading range and drifted even lower
marginally below this important level
Nifty ended the week with a net loss of 219 points (-2.00 per cent) on a weekly basis.
The coming week is likely to define the contours of
the market for the next couple of weeks
On Friday, the index ended marginally below the 50-week moving average, which now stands at 10,780 and rests on a trend line support
On the daily charts, it has bounced off the 100-day moving average, which is at 10,694.
The market is likely to see a positive start to the
week, as global cues remain positive
An immediate short-term technical pullback cannot be ruled out, but if the market fails to maintain certain important levels, it would risk
an alteration of its texture for the immediate short term.
The 10,780 and 10,930 levels may act as points of resistance on the higher side
while supports would come in at 10,620 and 10,500 levels.
The Relative Strength Index (RSI) on the weekly chart stood at 48.1836; it remains
neutral and does not show any divergence from the price
The weekly MACD remains bullish and trades above the signal line.
Pattern analysis of the weekly chart showed after pulling back from near
the 10,000 mark, the index halted its upward move near the 50-week moving average
The index penetrated this level and defended it for over eight weeks
However, it has shown a minor breach of this important support.
It currently rests at a trend line support just below this level
Overall, the market remains at a pattern support on the weekly chart and some technical pullback can be expected initially
However, it will be very important for the market to move past the 50-week moving average, and subsequently cross the 10,900 level to avoid
However, if this does not happen, then despite any short-term technical pullback that may be seen, we might see some cracks appear in the
We recommend remaining extremely light on the overall exposure and adopting a selective and cautious approach.
In a look at the relative
rotation graphs, we compared various sectors against the CNX500 index, which represents over 95 per cent the free float market-cap of all
the listed stocks.
It showed that BankNifty, consumption and financial services indices remain in the leading quadrant, but they are losing
They may remain resilient to any weakness, but may contribute modestly to their outperformance, if there is any
Whereas CNX IT and services sector indices and the energy pack remain in the leading quadrant, but they are improving their momentum firmly
They may outperform the broader market.
Importantly, the broader CNX100 index has crawled back in the leading quadrant and is being followed
closely by the CNX200 index, which currently remains in the weakening quadrant but is moving up directionally towards the leading quadrant
If this improvement in momentum continues, we may expect an improvement in the market breadth going forward.
Apart from this, Nifty Next 50,
auto, midcap and media indices have lost momentum and are in the lagging quadrant along with the Metal index
No noteworthy performance is expected from these groups
The pharma pack, though it remains in the lagging quadrant, is seen improving its relative momentum
This, along with the CPSE Index, can show stock specific outperformance within its components.
Important Note: RRGTM charts show you the
relative strength and momentum for a group of stocks
In the above Chart, they show relative performance as against Nifty500 Index (broader markets) and should not be used directly as buy or
