INSUBCONTINENT EXCLUSIVE:
Following an unabated rise in last several days, the domestic equity market finally took a breather on the last trading day of the week
In Friday’s session, Nifty displayed visible signs of consolidation, as it had got steeply overbought on the daily charts
As the week ended, Nifty also highlighted a major resistance area on the weekly chart that comes form of the lower trend line of the
30-month-old upward rising channel that Nifty broke on the downside.
In our previous weekly note, we had suggested investors to put prudence
before greed and avoid blindly chasing the rally
Nifty pared over 140 points from the week’s high to end the week with net gain of just 30.05 points, or 0.26 per cent.
On both daily and
weekly charts, the market has shown clear signs of fatigue
In the coming week, we expect minor corrective moves to persist and the 11,580-11,620 zone to act as an important resistance zone
The expiry of the current month derivative series in the coming week will add volatility to trade.
We expect the 11,620 and 11,690 levels
to act as key resistance points for Nifty
Supports are expected to come in lower at 11,420 and 11,320 levels.
The weekly RSI is at 64.2665 and it has marked a fresh 14-period high,
which is a bullish indication
It does not show any divergence from price
The weekly MACD is bullish and continues to trade above the signal line.
A Doji occurred on the candles
This behaviour of the market along with a large black body of the daily chart shows Nifty is finding it difficult to maintain its momentum
It has also formed a base of a potential corrective move that we might see in the coming days.
Pattern analysis of the weekly chart pointed
towards emergence of a potential resistance area
This comes in the form of the lower trend line of the 30-month-long upward rising channel that Nifty has breached on the downside in the
first week of October, 2018.
All in all, we suggest ignoring all upward moves, if we get any, in the coming week
All future upward moves should be utilised to lighten exposures
While maintaining exposures at modest levels, all profits should be vigilantly guarded at higher levels
We will see volatility creep into the market again.
A very cautious outlook is advised for the coming week
Nifty has ended outside the upper Bollinger band
But keeping in mind other pieces of evidence present on the chart, there are higher chances of Nifty seeing a pullback inside the band.
In
our look at Relative Rotation Graphs, we compared various sectors against CNX500, which represents over 95 per cent the free-float market
cap of all the listed stocks.
While reviewing the Relative Rotation Graphs (RRG), the Realty Index moved further ahead in the leading
quadrant and along with the Energy Index
It remains firmly placed to continue outperforming the broader market
Along with this, the IT Index remains in the leading quadrant, but it is taking a breather and consolidating at current levels
This group, too, is expected to relatively outperform the broader market.
Bank Nifty and the CNX Services Sector Index have started
drifting, while stalling its momentum
The PSU Bank, FMCG, Consumption, CNX Financial Services, Nifty Mid50 and Nifty Next50 indices are seen losing their relative momentum and
The auto and media indices, too, are faltering after sporadic moves in the previous week.
The pharma and CNX PSE indices have moved in the
improving quadrant and these groups are expected to further consolidate their respective positions and improve relative performance against
the broader market along with the Metals Index, which is improving its relative momentum, though it currently remains in the lagging
quadrant.
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 Nifty500 Index (broader markets) and should not be used directly as buy or
