Week Ahead: NIFTY Likely To Stay Capped Until Below This Level; Pharma, Metals, and IT To Relatively Outperform
The Indian probity markets extended its up move for this week as well and ended with gains. The NIFTY gained for the first three trading sessions and then consolidated in the last two sessions of the week. The market unfurled to walkout its internal strength and looks forward to defending its recent technical pullback seen over the past several days. The week that went by saw the Tabulate oscillating in a 561.40 points range. While the NIFTY stayed whilom key levels on the daily charts, it went past important levels on the weekly charts. The headline tabulate finally ended with a net proceeds of 458.65 points ( 2.64%) on a weekly basis.
Over the past several days, the strikes of 18000 protract to see the maximum unifying of the Call OI. This level will protract to act as resistance unless taken out convincingly. On the other hand, the highest PUT OI stands at 17500; this defines the likely trading range over the coming week. From a technical perspective, it is important to note that the NIFTY has moved past and crossed whilom the 20-Week MA which presently stands at 17553. There are chances that the markets consolidate in unstipulated with an inherently bullish undertone. Volatility increased, INDIAVIX climbed by 8.51% to 17.60.
The coming week is likely to see the levels of 18000 and 18080 vicarial as resistance points. The supports come in at 17710 and 17565 levels. There are unfurled chances of the markets witnessing ranged oscillations over the coming days.
The weekly RSI is 59.96; it stays neutral and does not show any divergence versus the price. The weekly MACD is bullish and stays whilom the signal line. A strong white candle emerged. This showed the directional consensus of the market participants throughout the week.
The pattern wringer of the weekly charts shows that pursuit a insemination of a candle with a long lower shadow, the NIFTY found a wiring for itself as it secure a crucial 16650-16700 zone. In the process, the Tabulate moreover took support at the lower Bollinger band; without this, a strong technical followed that took the markets higher.
As we throne into the new week, there are higher chances that the markets consolidate within a wholesale but specified range. Any runway up move is unlikely unless the NIFTY moves past the 18000 levels convincingly. On the other hand, plane downsides are likely to remain ranged and limited. Some consolidation, if at all it happens, should not come as a surprise as it would make the recent 1500-point technical pullback healthier and increasingly sustainable. It is recommended to stave shorts and use all opportunities to make select purchases while protecting profits at higher levels.
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 there is no material transpiration in the sectoral setup as compared to what was seen in the previous week. NIFTY PSU Bank, Media, and Auto groups are inside the leading quadrant. They towards to be taking a sabbatical and paring on their relative momentum front.
The IT Tabulate has moved inside the leading quadrant again. Withal with the whilom groups, it may now start relatively outperforming the broader NIFTY500 Index. NIFTY Energy Tabulate has slipped inside the weakening quadrant. The Realty Index, MIDCAP 100 Index, Infrastructure, and Services Sector Indexes are moreover inside the weakening quadrant. However, the tails do not show any major directional transpiration this week over the previous week.
NIFTY Financial Services Tabulate continues to languish in the lagging quadrant withal with Banknifty despite strong moves in the previous week. NIFTY FMCG, Consumption, and Commodities groups are inside the lagging quadrant as well but they are improving their relative momentum versus the broader markets.
The Metals and the Pharma indexes are inside the improving quadrant. They are likely to protract to relatively outperform the broader markets.
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
About the author: Milan Vaishnav, CMT, MSTA is a qualified Independent Technical Research Analyst at his Research Firm, Gemstone Probity 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. Learn Increasingly