INSUBCONTINENT EXCLUSIVE:
In our previous weekly note, we had talk about the emergence of the 10,785 mark as not only a likely lower top but also an important
resistance area for the Nifty50.
The week gone by saw fierce consolidation and the Nifty face resistance all week at the 10,785 mark
On the last day of the trading week, the Nifty50 attempted to move past this resistance area after showing a lot of resilience through the
week.
The benchmark index ended the week just a notch above this level, gaining 188.25 points or 1.77 per cent on a weekly basis
If the index manages to move past this level in a convincing manner, Nifty should move towards its previous highs.
Any slip below this will
again push the market into a consolidation phase
The 10,890 and 10,975 levels are likely to act as immediate resistance for the Nifty50 and supports should come in at 10,730 and 10,610
it has marked a fresh 14-period high
Also, as the RSI breaks out of a pattern, it is likely to lend strength to the market
The weekly MACD has seen a positive crossover and it is now showing a bullish setup trading above its signal line
No significant formations were observed on the candles during the week
Pattern analysis raised the possibility of the 10,785 level acting as an important resistance for the Nifty50
It also raised the possibility of this level becoming a lower top.
While Nifty attempts to move past this level, its behaviour in the coming
week will determine the short-term market trend
Overall, we are likely to see a modestly positive opening on Monday if there is no overnight surprise in the global setup.
The market has
the political event of Karnataka election to face, which is likely to infuse some volatility
Apart from this, if nothing untoward comes out of it, Nifty should head to higher levels
We recommend remaining very selective and stay with sectors that show strength
A cautious but positive outlook is advised for the week ahead.
Relative Rotation Graphs shows while we did see some performance from the IT
pack during the week, it has continued to lose relative momentum on week-on-week basis
The broader indices like NiftyNext 50 and NiftyMID50, along with Nifty Infra have suddenly seen a drop in relative momentum on a weekly
Auto, financial services and select stocks from Bank Nifty and PSU banks are likely to show mild improvement in relative performance during
Select energy, midcap and realty stocks will see selective outperformance against the broader market
In the above chart, they show relative performance as against NIFTY Index and should not be used directly as buy or sell signals.
(Milan
Vaishnav, CMT, MSTA is Consultant Technical Analyst at Gemstone Equity Research Advisory Services, Vadodara
He can be reached at milan.vaishnav@equityresearch.asia)
