INSUBCONTINENT EXCLUSIVE:
Marking a huge contrast to last week's market behaviour, Dalal Street gave up all the gains of last week to end near the low point of the
The market was sitting on the verge of a breakout, but that did not fructify as the market refused to break above its crucial resistance
Nifty stayed relatively rangebound during the week as Nifty oscillated in a 250-point range
The shorter timeframe charts had already shown some weakness and loss of momentum, and the longer-term charts painted a similar
picture.
Nifty finally ended with a net loss of 134.55 points, or 1.12 per cent, on a weekly note
The markets is poised at a crucial juncture once again
India VIX has cooled off by a further 1.85% to 13.64
The Volatility Index currently trades near its multi-month low, and this reflects complacency of the market players
Complacency at market highs is not good for near-term outlook
Apart from this, Nifty has kept alive hopes for a possible breakout as the RSI has attempted to resolve its bearish divergence against the
The coming week is going to be crucial and may decide market's trajectory for the coming weeks
While Nifty is likely to see a tepid start to the week, it will face resistance at 12,150 and 12,275 levels while supports will come in at
In the event of any downward move, the range may get wider than usual and volatility may also increase.
The Relative Strength Index (RSI) on
the daily chart stood at 59.96; it remains neutral and does not show any divergence from price
The RSI has attempted to penetrate the falling trend line that joins RSI’s lower tops, but that is seen taking a breather
The weekly MACD stays in continuing buy mode and trades above the signal line.
No important formations were seen on the Candles
Pattern analysis of the weekly chart shows that after a secular 36-month-long uptrend got interrupted at the end of 2018, Indian market has
been trading more in a broadly sideways range
We can interpret this as a small secondary trend
Despite making incremental highs, Nifty has not been able to get a breakout
All in all, while the market still has a few chances of achieving a breakout, it is likely to happen only if Nifty moves past and closes
above 12,150 convincingly
Until this happens, we are likely to see some range-bound consolidation, and corrective pressures from higher levels cannot be ruled out
The attempt to break out failed to confirm itself, and the loss of momentum is evident on the charts
We recommend avoiding aggressive positions and approaching the market on a highly selective note until a directional bias is established
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 stocks listed.
The review of Relative Rotation Graphs (RRG) shows some sudden loss of momentum across a few
Nifty Auto and Energy packs are seen continuing to lose momentum while remaining in the leading quadrant
The Financial Services group, which had shown a steady rotation in the previous week, is also seen retreating suddenly
Along with this, loss of momentum was also seen in the FMCG, Consumption, Commodities, Infrastructure and PSE indices
These groups, collectively, may not contribute much to the outperformance when benchmarked against the broader Nifty500 index.
The IT pack
is seen arresting its decline
It stays in the lagging quadrant, but appears to have stalled its decline
The Realty and Services sector indices are also seen consolidating their performance and improving their relative momentum against the
broader market.
Some resilient performance can be expected from PSU Banks, Metals, and Media packs as they are steadily advancing while
remaining in the improving quadrant
Nifty Pharma index, too, is seen rotating strongly towards the improving quadrant.
Important Note: RRGTM charts show the relative strength
and momentum for a group of stocks
In the above Chart, they show relative performance against NIFTY500 Index (Broader Markets) and should not be used directly as buy or sell
(Milan Vaishnav, CMT, MSTA is a Consultant Technical Analyst and founder of Gemstone Equity Research - Advisory Services, Vadodara
He can be reached at
milan.vaishnav@equityresearch.asia)
