INSUBCONTINENT EXCLUSIVE:
Friday saw the Nifty swinging on both sides
Despite an 80-point pullback from the lows of the day, the NSE index still ended the week with a net loss of 212.65 points, or 1.91 per cent
On a monthly basis, we saw the benchmark declining 750.05 points, or 6.42 per cent.
As we step into the next week, we are again facing a
truncated week, with Tuesday being a trading holiday on account of Gandhi Jayanti
We might see markets continuing to remain tentative, but they are much ripe for a technical pullback.
Such pullback seems overdue as the
markets remain oversold on short term charts
levels of 11,095 and 11,230 acting as immediate resistance levels while supports are expected to come in at 10,850 and 10,705 zones.
The
Relative Strength Index -- RSI -- on the Weekly Charts is 47.5723 and it has marked a fresh 14-week low, which is bearish
A bearish divergence is also seen as the RSI has marked a fresh 14-period low while the Nifty has not
Weekly MACD has shown a negative crossover and now trades below its signal line.
Pattern analysis throws up an interesting picture
During the past nearly 30 months, there have been four instances wherein the markets have taken support at the rising trend line that is
drawn from 7,000-level since early 2016
Out of these four instances, there were two where the 50-week MA also happened to be running along with this rising trend line.
So, out of
this broader view, if we take a limited view that relates to the coming week, the markets are trading near their important pattern supports
and a technical pullback remains imminent, given the fact that they remain oversold on the short-term charts
It was also observed that the futures segment volumes remained much higher than the cash segment volumes and this also shows mild
possibilities that the selling might have exhausted itself
This further indicates that there are a number of shorts that still exist in the system and these shorts may come in to lend support at
We recommend continuing to stay away from aggressive bets and now completely avoid shorts
Staying with large caps while making moderate purchases is likely to pay off.
In study of Relative Rotation Graphs, we compare various
sectors against CNX500, which represents over 95 per cent free float market cap of all the stocks listed.
Next week, it is best advised if
one sticks to largecap stocks and very limited and good quality midcaps only
The week will see relative outperformance from IT, pharma and energy stocks and the components of these indices are likely to distinctly
outperform the general markets on a relative basis
Furthermore, we might expect relative outperformance or at least resilient performance in the Nifty Midcap 50 Index, metals, public sector
enterprises, Nifty Junior and infrastructure stocks
Apart from these, rest of the sectors like FMCG, realty, media, broader indices like CNX100, CNX200, Small Caps, consumption stocks and the
like should be best avoided and no eye-catching performance is expected from them
Bank Nifty and auto packs are expected to consolidate with stock-specific performances.
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 NIFTY Index and should not be used directly as buy or sell signals.
