INSUBCONTINENT EXCLUSIVE:
In our weekly note last week, we had discussed about the likelihood of the Nifty attempting to move past its falling trend line resistance,
which joins the lower tops.In the week gone by, the benchmark index struggled throughout to move past this pattern area resistance but could
not make any clear headway on the upside
The pullback seen on the last trading session of the week helped the Nifty index close the week with a gain of 50.05 points, or 0.46 per
cent.The market is likely to remain critical in the coming week
The 10,820-10,850 zone will continue to be a critical area, and we will see Nifty attempt to move past the pattern resistance of this
falling trend line, which joins the lower tops.The coming week will see some volatility creep into the market, though the undercurrent is
likely to remain buoyant.The 10,890 and 10,975 levels are likely to act as immediate resistance for Nifty50 in the coming week
Supports should come in at 10,765 and 10,660 levels.The Relative Strength Index or RSI on the weekly chart stood at 60.7579
The index has set a fresh 14-period high, while the RSI has not and this has resulted in a bearish divergence.However, though this may
restrict and resist the immediate upward move in the present context, but the RSI is seen trying to break out of a pattern formation
The weekly MACD is bullish as it trades above the signal line
No significant formations were observed on the candles.Next week is going to be critical for the markets as Nifty moving past the pattern
resistance of the trend line joining a probable lower tops will be very important
We expect the market to remain rangebound
FO data suggests the range might get a little broader, but downsides will certainly remain capped.The coming week is likely to see the
market turn highly stock and sector specific
One should continue to guard profits at higher levels
Shorts should be avoided, unless some critical supports are breached, as the undercurrent continues to be buoyant.A study of Relative
Rotation Graphs shows PSU banks have further improved in terms of their relative momentum and are expected to continue this trajectory in
Along with this, the Bank NIFTY pack has moved into the leading quadrant and is expected to outperform on a relative basis
It is likely to have the company of the financial services sector, which is also expected to outperform
The FMCG pack is likely to do well but performance may remain stock specific
Apart from this, the pharma pack is expected to put up a better show on the relative momentum front
Broader indices such as CNX 100, CNX 200 and CNX 500 will continue on the falling trajectory and this may check any runaway rise in the
Auto, midcaps, smallcaps and Nifty Next 50 continue to deteriorate on the momentum front
No show is expected from the media pack
IT and realty may see sporadic outperformance.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 atmilan.vaishnav@equityresearch.asia)
