INSUBCONTINENT EXCLUSIVE:
In our previous weekly note, we had talked about the possibilities of the domestic market not seeing any runaway moves on the higher side
The market behaviour remained on the expected lines during the week gone by, as the headline index faced resistance at one of its
significant double top areas that lie in the 11,840-11,880 zones.
The market formed a weekly high around this point and then went into a
Nifty50 did not make any major headway on either side, and ended with a modest loss of 99.20 points, or 0.84 per cent, on a weekly basis.
As
we step into another week, we expect the market to remain generally volatile
India VIX, which rose 5.15 per cent this past week, is down over 50 per cent from its recent high
Along with these low levels of VIX, Nifty continues to remain at relatively elevated levels, laying the ground for a significant and
sustainable rise in the market.
Though a rangebound consolidation cannot be ruled out, the market remains more vulnerable on the
downside.
Nifty is likely to see a broader trading range in the coming week, with 11,850 and 11,945 levels acting as resistance points
Supports, on the other hand, should come in lower at 11,610 and 11,530 levels.
The weekly RSI stood at 59.02
It remains neutral and is not showing any divergence from price
If inspected visually for an extended period, the RSI appears to have marked lower tops and is facing resistance from the trend line
The weekly MACD remains bullish and trades above the signal line
It is sharply narrowing its trajectory
No significant formations were observed on the candles.
Pattern analysis on the charts showed Nifty has formed a lower top and lower bottom
The index faced resistance initially at the lower trend line of the three-year-long upward rising channel which it had breached at the end
of 2018.
After forming lower tops and bottoms, the headline index faced resistance at the significant double top resistance that exists in
the 11,840-11,880 zone.
The coming week will be crucial as the market faces technical headwinds at higher levels
The broader technical setup remains challenging
Unless Nifty ends above the 11,900 mark, there are fewer possibilities of any sustainable rally.
We expect volatility to increase in the
Traders should avoid aggressive positions on either side and keep protecting profits on every directional move.
In our look at the Relative
Rotation Graphs, we compared various sectors against CNX500, which represents over 95 per cent of the free float market-cap of all the
listed stocks.
A review of Relative Rotation Graphs (RRG) shows Services, PSE and financial services stocks could show a relative
outperformance as they remain firmly placed in the leading quadrant
Joining these groups are IT and infrastructure packs, which have quietly crawled into the leading quadrant while steadily improving their
relative momentum compared with the broader market.
Apart from this, Realty, Media, Metals, Bank Nifty, PSU Banks, Pharma and Energy groups
are losing their relative momentum, and no standout performance is expected
Though stock-specific moves are expected from these groups, no major outperformance is likely
The Auto Index, which has moved into the improving quadrant, is likely to take a sharp turn and may remain under pressure in the coming
week.
Important Note: RRGTM charts show you the relative strength and momentum for a group of stocks
In the above Chart, they show relative performance against NIFTY500 Index (Broader Markets) 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 milan.vaishnav@equityresearch.asia)
