INSUBCONTINENT EXCLUSIVE:
The risk-on global setup, which had begun a week before, continued throughout the previous week as well
The resultant buoyant setup drove the Indian market higher, which ended at a new lifetime high.
Though the momentum continued to falter, the
market did not show any sign of retracement and, instead, continued to consolidate at higher levels
After experiencing rangebound movement over the past couple of days, Nifty ended the week with a net gain of 185 points, or 1.53 per
cent.
While we trade at near lifetime highs, there are a couple of points one should not lose sight of
Despite Nifty closing at its highs, the loss of momentum is very much visible on the charts, and this has resulted in the weakening of
Volatility index INDIA VIX has cooled off by a further 7.33 per cent to 12.32, and it now trades at one of its lowest levels in recent
All these may not result in any immediate downtrend, but it is something that we should keep in mind and be aware of.
The market is likely
to see a quiet start to the coming week
Nifty continues to remain in the uncharted territory, and the 12,310 and 12,400 level will act as resistance, while supports will come in
much lower at 12,170 and 11,900 levels
In the event of any corrective move, the trading range is expected to get broader than usual.
The Relative Strength Index (RSI) on the
weekly chart stood at 66.44; it remains neutral and does not show any divergence against the price
The weekly MACD is bullish, and it trades above the signal line
A white body has emerged on the candles, though it does not represent any critical formation on the charts.
Pattern analysis of the weekly
charts showed Nifty has achieved a breakout after moving past the 12,100 mark on a closing basis
There is a clear loss of momentum on the charts, but as long as Nifty stays above the 12,100 mark, this breakout will continue to be in
force.
If we see continued uptrend over the coming week, we will need to keep in mind that the market remains somewhat overbought and
over-extended on the charts
Such a formation has increased the possibility of the market taking a breather
It seems to be in for some consolidation at current level
Exercise prudence and resort to vigilant protection of profits at higher levels to avoid getting caught on the wrong foot in the event of
any corrective move, if there is any
(Nifty500 Index), which represents over 95 per cent of the free float market-cap of all the listed stocks.
A review of Relative Rotation
Graphs (RRG) showed that for the coming week, we will need to keep our focus on PSU Banks, Bank Nifty, Media, Metal, Pharma and Auto stocks
These sectors are placed at different places in the Improving and the Leading Quadrant and appear to be moving higher while maintaining
their relative momentum.
These groups may collectively present relative outperformance when benchmarked against the broader Nifty500 Index
The degree of their relative out-performance will vary because of their distance from the benchmark Nifty500 Index
The Energy group is on the verge of slipping in to the weakening quadrant.
Know Your Risks21 Dec, 2019While many people are making lists of
track to end with most asset classes faring pretty well
Euro Short
6) Populism, Inequality and Shareholder Primacy
7) Market Positioning for Japanification
8) Cyber and the Risk of AI-vs-AI
might seem surprising, like gene editing -- but that made the list given things like the news that a researcher in China had tried to
On Familiar Ground21 Dec, 2019Others, like emergence of competing trade blocs and United States election volatility, will be familiar to
anyone who has been paying attention this year
Indeed, the leadership-storm idea and trade-bloc entry were on the late-2018 list also
The strategists even included a recap of their list from last year.
While in 2017, just four of the 10 items on their list went on to
Alongside Energy index, the FMCG and the Consumption indices have also advanced further into the weakening quadrant
The Infrastructure index has further advanced into the lagging quadrant and these groups are likely to relatively underperform the broader
market.
The IT pack remains the worst performer and it is seen lying far in the lagging quadrant while attempting to stabilise
However, it is unlikely to show any significant performance over the coming week
The Financial Services pack has also advanced in the leading quadrant and is likely to display some resilience in the event of any
corrective move in the market.
Important Note: RRGTM charts show 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 and founder of Gemstone Equity Research - Advisory Services, Vadodara
He can be reached at milan.vaishnav@equityresearch.asia)