INSUBCONTINENT EXCLUSIVE:
The market was seen posting gradual weekly higher closings over the past couple of weeks, which got halted this past week
In our previous weekly note, we had mentioned about distinct possibilities of the overbought and over-extended technical charts weighing
heavy on the market despite it getting a fillip from better GDP data.
In line with that analysis, the Nifty50 oscillated in a broad range
during the week gone by and ended with a net loss of 91.40 points, or 0.78 per cent, on a weekly basis.
With the Nifty marking a similar
high at 11,751 against the previous high of 11,760 hit a week before that, it has once again reinforced the 11,760 level as a temporary top
for the market until it is taken out.
As we enter a new week, we expect a flat to modestly positive start with
However, despite positive moves that Nifty may have witnessed, it is very unlikely to take out the previous high at 11,760 level anytime
soon.
We have a truncated week ahead with Thursday, September 13, being a trading holiday
Nifty will see the 11,760 and 11,810 levels act as immediate resistance in the coming week while the 11,510 and 11,395 levels will act as
support.
The weekly RSI stood at 72.3708 and it continues to remain neutral showing no divergence against price
However, the RSI remains in the overbought territory
The weekly MACD stays bullish as it trades above the signal line
On the candles, an Engulfing Bearish Line has occurred
This is a classical occurrence as it occurred after an over-extended upward move and is likely to reinforce the 11,760 level as a temporary
top for the market and potentially stall the upward move.
Going into the next week, we are likely to grapple with rising crude oil prices
and a depreciating domestic currency
Usually, all of these do not go down well with the equity market
However, a good number of shorts positions still exist in the system and they will continue to lend support at lower levels.
We do not see
the market make any dramatic downside, but upsides are likely to remain capped
With the possibility that Nifty will continue to oscillate in a broad range, we recommend remaining highly stock specific in approach and
guard against any volatile profit taking at higher levels
A cautious view is advised for the coming week.
In a study of the Relative Rotation Graphs, we compare various sectors against CNX500, which
represents over 95 per cent free float market capitalisation of all the listed stocks.
In the coming week, we will see the pharma pack take
a breather despite remaining in the leading quadrant
There is a similar case with the FMCG pack as well, as it has lost some momentum despite remaining in the leading quadrant
There will still be some stock-specific outperformance here
PSU banks are likely to remain stable and they may relatively outperform the general market along with energy stocks continuing with their
lead performance.
There is significant improvement in the Metals and Infrastructure sectors in terms of momentum and these sectors may
continue to improve their relative performance
Services sector, Bank Nifty, consumption and financial services stocks are likely to show some deterioration in momentum, as they slowly
The auto pack seems to have exhausted its downward move and may consolidate some bit
Midcap and Nifty Next50 (Nifty Junior) may continue to outperform selectively and improve their momentum.
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 Nifty Index and should not be used directly as buy or sell signals.
