INSUBCONTINENT EXCLUSIVE:
By Milan Vaishnav, CMT, MSTANifty struggled to find some base and managed to end the week with modest gains even as it traded in a broad
The trading range remained moderately broad, but the index oscillated quite a lot, infusing intraday volatility during the trading session
While holding on to its key support levels, Nifty ended with net gains of 130 points, or 1.17 per cent, on a weekly basis
Discounting the intraday volatility that remained ingrained, volatility index India VIX declined modestly by 2.57 per cent to 17.14.
Nifty
defended two key levels during the previous week; the 200-DMA at 11,270 and the 50-week MA at 11,197
The 11,197-11,270 zone will act as a key support over the coming days
Any breach of this zone will invite weakness.
As long as Nifty stays above these levels, we will see some consolidation in a defined range
with limited upside for the market.
We expect a stable start to the week ahead
The likelihood of a temporary or a partial truce between the US and China may aid sentiment to some extent.
Coming back to technicals, Nifty
is critically poised, and will struggle with the weak broader technical setup until it takes out a few crucial resistance levels
In the coming week, the 11,375 and 11,510 levels are likely to act as key resistance for Nifty, while supports will come in at 11,150 and
There are chances of the trading range getting wider during the week.
The Relative Strength Index (RSI) on the weekly chart stood at 50.5973
It remains neutral and does not show any divergence against price
The weekly MACD is bearish, and continues to trade below the signal line
No significant formations were seen on the candles.
Pattern analysis of the weekly chart revealed a very distinct bearish divergence of the
Apart from this, Nifty has managed to keep its head above the 50-week MA, which currently stands at 11,197
Any slip below this level will bring in weakness in the market in the coming days.
The market is likely to exhibit volatile behaviour as the
On one hand, the broader technical setup remains challenging; while on the other hand, Nifty may keep witnessing short coverings at lower
levels, creating limited upside potential.
The market is likely to struggle hard to establish a sustainable upward directional bias
The coming week is likely to witness a lot of volatility
We reiterate staying light on exposures and vigilantly protecting profits at higher levels throughout the week.
In our look at Relative
Rotation Graphs, we compared various sectors against CNX500 (Nifty500 Index), which represents over 95% of the free-float market-cap of all
the listed stocks.
A review of Relative Rotation Graphs (RRG) showed there could be buoyant activity in certain pockets
Among the FMCG, consumption and the IT indices that remain in the leading quadrant, only the consumption pack has managed to retain its
The IT and FMCG groups are seen losing their relative momentum
We will see only stock-specific activities among these groups.
The auto and energy indices have firmly advanced into the improving quadrant
They may contribute to relative outperformance against the broader market along with FMCG and consumption groups
These sectors may attempt to post resilient performance during the week
Media and pharma groups have lost their relative momentum against the broader market sharply despite remaining in the improving quadrant and
are seen heading southward.
The CPSE index has arrested its decline, and is seen consolidating at the moment
Apart from these groups, the services, realty, metals, infrastructure, financial services indices and Bank Nifty, especially PSU banks, are
likely to be relatively underperform the broader market.
Important Note: RRGTM charts show the relative strength and momentum for a group of
In the above chart, they showed relative performance against NIFTY500 Index (broader market) and it should not be used directly as buy or
sell signals.
(Milan Vaishnav, CMT, MSTA is a Consultant Technical Analyst at Gemstone Equity Research - Advisory Services, Vadodara
He can be reached at milan.vaishnav@equityresearch.asia)
