INSUBCONTINENT EXCLUSIVE:
In a truncated week, beginning from the short Muhurat session, the stock market ushered in the New Vikram Samvat on a buoyant note
a new move would depend upon the index moving past these levels.
Nifty managed to push past this zone, and this saw the market inch higher
Benchmark Nifty ended the week on a strong note, gaining 306.70 points, or 2.65 per cent.
The coming week will be extremely crucial, and the
market behaviour in the following week will affect its trend for the immediate short term
Though Nifty has attempted a breakout on the short-term charts, it has closed just below the multi-month resistance zone at 12,000-12,100 on
the weekly chart.
While Nifty inched higher, it also experienced a bearish divergence from one of its leading indicators; the RSI
If Nifty inches higher and there is no confirmation, the up-move may get unhealthy
On the other hand, any movement on the higher side, along with the confirmation, will lend new strength to the market.
While we may watch
the market behaviour with fingers crossed, there are still possibilities that Nifty may temporarily stall its up-move and consolidates at
The 12,000 and 12,095 levels will act as resistance, and supports may come in at 11,790 and 11,710.
The Relative Strength Index (RSI) on the
weekly charts stood at 61.5748
It is seen making lower tops while Nifty is seen attempting to inch higher
The weekly MACD remains bullish and trades above the signal line
A Whole Body candle has emerged
Apart from this, no significant formation was seen on the candles.
Pattern analysis of the weekly charts showed after peaking out once in
late 2018, Nifty made incremental highs, but these attempts to break out were not confirmed
Nifty has witnessed continued bearish divergence on the RSI
As it made intermittent attempts to move higher, RSI has kept making lower highs.
During the time Nifty made higher bottoms, the 100-week
moving average has acted almost as a proxy trend line for the market.
There are a couple of things that we need to take into account
Though Nifty has attempted a breakout on the short-term charts by moving past the 11,700-11,750 zone, it has got mildly oversold on a few
On the other hand, on the weekly charts, there is no such breakout as of now.
The index has ended below its multi-month resistance points,
and faces a continued bearish divergence from the RSI.
This is the time to approach the market with extreme caution
It would be prudent to wait for a breakout to happen on the weekly charts, followed by a confirmation, for signals of sustained upside
Unless this happens, investors should remain highly vigilant as they chase up-moves
With no breakout on the longer-term charts, Nifty continues to remain prone to consolidation at higher levels.
In our look at Relative
Rotation Graphs, we compared various sectors against CNX500 (Nifty500 Index), which represents over 95% of the free-float market cap of all
the listed stocks.A review of the Relative Rotation Graphs (RRG) shows sectoral rotation has continued over the previous week
The infrastructure index has crawled into the leading quadrant along with the energy pack
These groups are likely to post resilient performance in the coming weeks
Apart from these groups, FMCG and consumption also remain in the leading quadrant, but the momentum is slowing down
Collectively, these groups are expected to post relative outperformance against the broader market.
The Financial Services, Bank Nifty, PSU
Bank and Realty packs are in the weakening and lagging quadrants
Though they appear to have arrested downsides, they do not seem to have bottomed out completely
Some relative underperformance from these groups should not come as a surprise.
Metals, auto, and CPSE indices are in the improving quadrant
These groups are likely to post isolated stock-specific outperformance against the broader market
The Pharma and Media groups appear to be losing their relative momentum sharply and may continue to relatively underperform over the coming
days.
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 a Consultant Technical Analyst at Gemstone Equity Research - Advisory Services, Vadodara
He can be reached at milan.vaishnav@equityresearch.asia)
