The previous week saw markets remaining range bound and oscillated in a 250-point range while ending with a modest gain.
Though markets did not take any directional call on either side, it saw significant amount of volatility within defined range.
While holding on to 50-week MA level which is 10,749 at close, Nifty ended week with gains of 112 points (+1.04%) on a weekly basis.Despite staying range bound, there are a couple of technically important points that should be taken note of.
On daily charts, Nifty rebounded more than once from important support zone of 200-DMA and 100-DMA, which are important pattern support for markets.
On weekly charts, index has managed to crawl further above its 50-week MA, which is 10,749.In coming week, we expect markets to make a decisive directional call.
For this to happen, move beyond 10,950-mark will be important.
All throughout coming week, level of 10,950 will be important to watch.
Any decisive move beyond that will see Nifty testing lower trend line of upward rising channel that it breached on downside in first week of October 2018.We expect levels of 10,950 and 11,300 acting as immediate resistance levels while supports are expected to come in at 10,810 and 10,670.The weekly RSI is 53.0944.
It has marked a fresh 14-period high, which is bullish.
RSI does not show any divergence against price, but it is seen breaking out of a minor formation.
The weekly MACD remains bullish while trading above its signal line and remains in continuing buy mode.
A small white body emerged on candles.
It has emerged near support area of 20-week MA and 50-week MA.
Apart from this, it remains insignificant in present context.The zone of 10,900-10,950 might provide some resistance for some more time, but any meaningful breach of those levels on upside will not only give a breakout from ascending triangle formation on daily charts, but also provide impetus and strength needed to index to make significant advancements on weekly charts.However, on technical grounds, unless zone of 10,900-10,950 is meaningfully taken out, we suggest adopting highly stock and sector-specific approach.
Exposures should be kept moderate unless a breakout is achieved.
Shorts, however, should be avoided asunderlying intent of markets remains buoyant.In our look at Relative Rotation Graphs, we compared various sectors against CNX500, which represents over 95 per cent free float market cap of all stocks listed.The study of Relative Rotation Graph (RRG) shows that infrastructure index and Nifty Mid 50 index have continued to lose momentum despite remaining in leading quadrant.
The BankNifty Index, along with Services Sector and Financial Services index remains in leading quadrant, is seen stable.The PSUBank Index remains in leading quadrant, but is seen taking a breather and has shown mild signs of slowing down along with Auto index which is in improving quadrant.
FMCG, Energy and IT packs are seen getting stronger on their momentum when compared against broader markets.CNX Metal, Pharma and PSE indices are seen continuing to lose ground and apart from stock-specific performances that will be seen, no major index level advancement is likely.