Stock Market

Dalal Street week ahead: Nifty charts resilient, but Syria strike will alter it all

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In our previous weekly note, we had mentioned that we continue to remain in the 27-month-long upward rising channel, which is the primary uptrend.

We had also expected the gains to get extended in the coming week. In line with that analysis, the market extended its gains during the week gone by.

The benchmark Nifty50 index ended the week, gaining 149 points or 1.44 per cent on a weekly basis. Global volatility, which was intense in the previous couple of week, has become somewhat less intense.

But following the US air strikes on Syria, it's going to get tense again and this is likely to have a bearing on the market in the coming week. Though we remain little overstretched on the daily charts, we expect the market to remain largely resilient to any major downside in the coming week.

Some consolidation and volatile rangebound moves are likely, but we expect the market to maintain an upward bias despite minor, intermittent hiccups that we may see during the week. Nifty50 will face resistance at the 10,565 and 10,690 levels during the coming week.

Supports will come in at 10,365 and 10,290. The Relative Strength Index or RSI on the weekly charts stood at 55.1793 and it remained neutral showing no divergence against the price.

The weekly MACD has flattened its trajectory and is moving towards reporting a positive crossover.

No significant formations were observed on the candles. Pattern analysis shows the Nifty has attempted to move past its 20-week moving average.

This may bring in some short term momentum in the markets.

This will also keep the consolidation moves, if any, less damaging for the market. Overall, there are no signals present on the charts that may suggest any significant downsides to the markets.

However, Nifty remains slightly overstretched on the daily charts and this may bring in some volatile consolidation. It is important to note that once the markets have been able to navigate through some consolidation, which seems imminent, it is likely to continue with its upward move as the undercurrent remains intact.

We reiterate making use of any corrective bouts that the markets may see to make select purchases. Sector-specific outperformance will be seen. A study of Relative Rotation Graphs shows though the IT pack continues to relatively outperform the broader market, the evident loss of momentum continues and this should be seen with caution.

Apart from this, we expect the services sector and FMCG pack to continue relative out-performance over the broader market.

Another important thing to notice is that across the board, all broader indices have shown sharp improvement in the relative momentum. We will see components of CNX 100, 200, 500, Nifty Next 50, NIFTY MidCap 50 and Nifty 100 packs to selective better their performance and relatively outperform the broader market. This, despite the fact that these packs remain the lagging quadrant.

No significant performance is expected from realty and PSU banks.

Energy and auto packs are expected to show scattered outperformances. 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. (Milan Vaishnav, CMT, MSTA is Consultant Technical Analyst at Gemstone Equity Research Advisory Services, Vadodara.

He can be reached at This email address is being protected from spambots.

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