INSUBCONTINENT EXCLUSIVE:
This was the second week in a row when the Indian equity market did not make any significant headway
The week that gone by remained volatile as the market oscillated back and forth on either side in a defined range, while it continued to
face resistance in the lower trend line of the rising channel that it had breached on the downside in late 2018.
While heading nowhere, the
benchmark Nifty50 ended with a net weekly loss of 22.50 points, or 0.19 per cent
The coming week is going to be a short one, with only three trading sessions, as Wednesday and Friday would be trading holidays on account
of Mahavir Jayanti and Good Friday, respectively
Looking beyond the coming truncated week, the market is ringing some serious warning bells, which deserve a close scrutiny.
The Volatility
Index or VIX, which is also referred to as the “fear gauge” or “fear index,” typically has a strong negative correlation with the
However, in recent weeks, this relationship has been thrown off balance and we have seen that both Nifty and VIX rise together.
Whenever
this has happened in the past, it has spelt trouble for the market in the following week
This week, the VIX has gained 14.56 per cent to 21
Currently, the VIX is at a level that was seen before only in early 2016.
The 11,760 level will continue to pose stiff resistance to the
market going into the next week
Supports will come in lower at 11,550 and 11,410 levels
The weekly RSI stands at 66.9758; it remains neutral and shows no divergence against price.
The weekly MACD remains bullish and trades above
An Engulfing Bearish candle has occurred
Though this is not a large candle but certainly shows discomfort among market participants at current levels.
We have seen the defensive
sectors rotate favourably over the past couple of days
This trend is likely to continue in the coming week as well
We suggest staying away from creating any aggressive positions and remain moderately invested in the defensive stocks.
Given the ongoing
general elections, the market will continue to exhibit a tentative approach in the coming days
A cautious outlook is advised for the coming week.
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.
The review of Relative Rotation Graphs (RRG) shows
bulk of the action is likely to remain concentrated in pharma, IT, media, metal and realty packs in the coming week
While realty remains firmly placed in the leading quadrant, the remaining groups are in the improving quadrant.
However, their relative
momentum remains strong and intact compared with the broader market
The auto index has crawled into the improving quadrant
The Energy index is placed in the leading quadrant, but it is seen losing its relative momentum along with Bank Nifty
The IT pack has also slipped into the weakening quadrant.
The PSU Bank group is seen sharply reversing its trend and improving the momentum,
but it still remains in the weakening quadrant along with services and financial services indices.
Apart from this, consumption and FMCG
groups continue to slide further in the lagging quadrant
The infrastructure index also remains in the lagging quadrant, but it is sharply improving its relative momentum when benchmarked against
the broader market.
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
