Over the past five days, the somewhat volatile NIFTY oscillated in a specified range surpassing ending the week with modest gains. Throughout the week, the majority of the time was spent on a touching-up note. It was only the last day of the trading week that saw massive short-covering and helped the benchmark tabulate tropical in positive territory on a week-on-week basis. The markets traded in the 324-point range and, without testing crucial levels, kept their throne whilom their important supports. Following a largely surly undertone except for the last trading session, the NIFTY ended with a net proceeds of 185.95 points ( 1.04%) on a weekly note.
We once have a truncated week, as Friday will be a trading holiday on the worth of Gurunanak Jayanti. The NIFTY is clinging on to a rising trend line support on the weekly charts; on the daily chart, it is rented defending a head-and-shoulder pattern that can turn potentially bearish. However, to stave weakness, NIFTY will have to move past 18130 as soon as it can; lightweight this, it may invite some weakness then and stay under a wholesale consolidation. The surge that we saw on Friday was due to heavy short-covering; this was evident as the up move came with a ripen of over 6.80 lakh shares or 6.32% in Net Open Interest in NIFTY futures.
The only thing that the NIFTY needs to take superintendency of in the coming week is to move past and then stay whilom 18130 levels. The levels of 18145 and 18365 will act as resistance points. The supports come in at 18010 and 17800 levels.
The weekly RSI is 69.41; it is neutral and does not show any divergence versus the price. The weekly MACD is bullish and whilom its signal line. However, the narrowing slope of the histogram shows the possibility of this indicator showing a negative crossover in the coming weeks.
A candle with a small real soul and a somewhat longer lower shadow occurred. No major formations were noticed on the candles.
The pattern wringer shows that the NIFTY has managed to stay whilom the upper rising trend line. This trend line begins from the low point worked in March 2020 and joins the subsequent higher bottoms. It would be crucial for the NIFTY to stay whilom this rising trend line pattern support.
All in all, the markets are hanging on precariously to their supports; the supports are not violated, on the one hand, but, on the other hand, a well-spoken trend on the upside has moreover not resumed. In the present technical setup, it is recommended that you stave any aggressively leveraged exposures on either side. Unless a directional bias is established, the risk-reward ratio will stay adversely skewed regardless of the kind of exposures taken. It is moreover recommended that you protract staying highly stock-specific and selective in tideway towards the markets.
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) does not show any major structural transpiration in the setup; it has just seen rotations up-and-coming remoter from their respective places over the previous week. The Energy, Media, Realty, PSE, Infrastructure, and Midcap Indexes are inside the leading quadrant of the RRG. These groups are likely to relatively outperform the broader markets. The Consumption Tabulate is moreover inside the leading quadrant; however, it is seen giving up its relative momentum at present.
The NIFTY IT Tabulate stays inside the weakening quadrant. NIFTY Pharma, Metals and the Commodities indexes are inside the lagging quadrant. All of these three are showing resurgence in their relative momentum versus the broader markets. The FMCG tabulate is moreover inside the lagging quadrant; it is languishing while paring its relative momentum versus the broader markets.
NIFTY PSUBank, BankNifty and Nifty Auto are inside the improving quadrant and towards to be firmly towers on their relative momentum. The Financial Services tabulate is moreover in the improving quadrant, but it is seen rotating southward while giving up on its momentum.
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
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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.