Except for some intermittent consolidation, the previous five trading days largely saw the markets up-and-coming and extending their technical pullbacks on the predictable lines. As mentioned in the previous technical note, the upper Put OI at 17000 stayed unvarying and this lent support to the markets all through the previous week. The markets secure and moved past some key levels on the daily charts as well over the past five days. Pursuit a 567-point movement range, the headline tabulate ended with a net weekly proceeds of 350.30 points ( 2.06%).
Friday was not only the last trading day of the month, but it moreover ended 2021 as well on a positive note. While NIFTY sealed with net monthly gains of 370.85 points ( 2.18%), it ended the year with YTD gains of 23.79% while outperforming the NIFTY Bank Tabulate that returned 13.63% on a YTD basis. The NIFTY is in kissing loftiness of its intermediate short-term resistance that of the 20-Week MA. This level is presently at 17485. This makes the zone of 17400-17500 an important resistance zone for the NIFTY to navigate surpassing it remoter extends its move. Even the weekly options data show 17500 holding the highest Call OI as of now; this makes this point an firsthand resistance for the markets. Unless this level is taken out convincingly, we will see the markets consolidate a bit virtually the current levels.
With major global markets sealed on Monday, we are unlikely to have any major cues for Monday and Tuesday for the domestic markets. The markets are likely to ring into the new year on a quiet note. For the coming week, the levels of 17500 and 17655 vicarial as resistance points. The supports will come in at 17280 and 17035 levels. The trading range over the next five days will be modest but the markets may see some ranged oscillations during the week.
The weekly RSI is 55.21; it stays neutral and does not show any divergence versus the price. The weekly MACD is surly and trades unelevated the signal line. A large white candle emerged; this reflects the directional consensus of the market participants on the upside. Remoter to this, given that this strong and bullish candle appeared pursuit a hammer, this reinforces the points of the support zone of 16400-16500 in the near term.
The pattern wringer of the weekly orchestration shows that despite an intra-week violation of 16650-16700 levels, this basing zone of the Tabulate was largely secure with the markets crossing whilom this point. By and large, 16700 remains a hair-trigger level to watch over the coming weeks. Staying whilom this will pension the markets under wholesale consolidation; violation of this point will be structurally rabble-rousing on the charts.
As we throne into the fresh week of the new year, we expect the markets to walkout underlying buoyancy. We may see some unfurled lack of participation due to the holidays; this may moreover rationalization some intermittent ranged-bound consolidations. However, it is recommended to stave shorting the markets at current levels. All downsides, that may come as a part of consolidation, must be used to make select purchases. A timidly positive outlook is well-considered for the coming week.
Sector Wringer for the coming week
In our squint at Relative Rotation Graphs®, we compared various sectors versus CNX500 (NIFTY 500 Index), which represents over 95% of the self-ruling bladder market cap of all the stocks listed.
The wringer of Relative Rotation Graphs (RRG) shows that the NIFTY Metal tabulate has rolled inside the improving quadrant. This hints at the resumption of some good moves in relative terms from this sector. The PSUBANK, Media, Auto, Media, and Energy Sectors are inside the leading quadrant. However, they all towards taking some sabbatical and consolidating.
NIFTY IT tabulate is seen making strong moves and is well-nigh to enter the leading quadrant. Apart from this, NIFTY Infrastructure and Realty Indexes are inside the weakening quadrant. NIFTY PSE has rolled inside the lagging quadrant.
FMCG Tabulate is moreover inside the lagging quadrant; however, it appears to be improving on its relative momentum NIFTY Bank has slipped then inside the lagging quadrant.
NIFTY Pharma, withal with the Metal Tabulate that has rolled inside the improving quadrant, is seen making stable moves. These groups will protract to modernize their relative performance versus the broader markets. Some isolated moves from the Financial Services sector, Commodities, and Consumption moves cannot be ruled out.
Important Note: RRG™ charts show the relative strength and momentum for a group of stocks. In the whilom Chart, they show relative performance versus NIFTY500 Tabulate (Broader Markets) and should not be used directly as buy or sell signals.
Milan Vaishnav, CMT, MSTA
Consulting Technical Analyst
Milan Vaishnav, CMT, MSTA is a qualified Independent Technical Research Analyst at his Research Firm, Gemstone Equity Research & Advisory Services in Vadodara, India. As a Consulting Technical Research Analyst and with his wits in the Indian Capital Markets of over 15 years, he has been delivering premium India-focused Independent Technical Research to the Clients. He presently contributes on a daily understructure to ET Markets and The Economic Times of India. He moreover authors one of the India’s most well-judged “Daily / Weekly Market Outlook” — A Daily / Weekly Newsletter, currently in its 15th year of publication.
Milan’s primary responsibilities include consulting in Portfolio/Funds Management and Advisory Services. His work moreover involves recommending these Clients with dynamic Investment and Trading Strategies wideness multiple asset-classes while keeping their activities aligned with the given mandate.