INSUBCONTINENT EXCLUSIVE:
The week gone by saw a lot of volatility and remained fruitless for the market
What had been gained in the week before was all lost during this week
In our previous weekly note, we had mentioned that the market had enough room to pull itself back to around 10,700 mark
This week saw Nifty test the 10,700 level, but it was precisely from this mark that the index saw a sharp bout of correction
The equity benchmark ended the week 168.95 points, or 1.61 per cent, down on a weekly basis though it still marked a higher top and higher
bottom on the weekly charts
As we approach a new week, we expect the market to remain volatile as FO rollovers dominate the proceedings
Even though the market remains in a continuing downtrend, it has shown some signs of a likely technical pullback
We expect a stable start to the week and the market may attempt to pull back once again and try to re-validate the present zone as its base
for the immediate short term.
The 10,430 and 10,590 levels are likely to act as immediate resistance for the Nifty50, while support are
likely to come in at 10,250 and 10,140 levels.
The weekly RSI, which is at 36.4130, shows bullish divergence against the price
The weekly MACD remains bearish as it trades below its signal line
No significant formations were observed on the candles.
Pattern analysis showed the Nifty, which has marked its lifetime high at 10,651, has
run up much ahead of its curve
In a sharp reversion to the mean that was seen, it suffered a equally sharp corrective downside and slipped below its 50-week moving average
the Nifty remains in a continuing downtrend, few of its lead indicators on the charts remain nearly oversold
This means in the event of any further weakness in the market, it is not likely to breach the 10,180-10,200 levels in the worst case
On the other side, we will continue to see the 50-week MA act as resistance in the event of a pullback
Broadly speaking, we are likely to see a volatile week ahead with Nifty oscillating in a broad range struggling to form and confirm a base
for the immediate short term.
Sector rotation is evident in the market and with every dip, we see more defensive purchases in sectors like
metals, infrastructure and pharma
We recommend investors to remain light on overall exposures and avoid aggressive short positions as long as Nifty defends the base of
10,180-10,200.
In a study of Relative Rotation Graphs, we compared various sectors against CNX500, which represents over 95% of free float
market cap of all the listed stocks.
While inspecting Relative Rotation Graphs (RRGs), the energy pack is distinctly losing momentum though
it continues to remain in the leading quadrant
The pharma pack along with IT continues to be firmly in the leading quadrant with improving momentum
In the coming week, we expect to see distinct relative outperformance from these sectors
Metal, Infrastructure and Media stocks should also continue to improve their momentum and subsequently their relative outperformance
The PSU pack, too, is expected to perform well
Bank Nifty is likely to consolidate along with services sector stocks
No eye-catching performance, except for select stocks, is expected from FMCG and Midcaps and PSU Banks segments
Auto and Realty are likely to lag.
Important Note:In the above chart, they show relative performance as against Nifty Index and should not
be used directly as buy or sell signals.
