INSUBCONTINENT EXCLUSIVE:
The domestic equity market made modest advance during the week gone by, as the Nifty50 index inched higher and ended the week gaining 128.25
points, or 1.21 per cent on a weekly basis
Volatility was less-than-expected and the market showed no sign of any corrective move, barring a few rangebound and slightly volatile
April series FO expiry was also relatively less volatile
The coming week will be a truncated one, with Tuesday being a trading holiday
In the four-day week ahead and beyond that, we expect the market to continue with its upward move
However, we might also have to tackle a volatile trading environment
As volatility hits lowest levels in recent times and slightly overstretched oscillators will keep the market participants cautious.
The
coming week will see the Nifty50 test major resistance at the 10,790 and 10,885 levels
Supports should come in at 10,610 and 10,550 levels.
On the weekly chart, Relative Strength Index or RSI stands at 60.1670
It remains neutral, showing no divergence from price
Weekly MACD is still bearish as it trades below the signal line
However, it is moving sharply towards a positive crossover in the coming days
Apart from a white body that occurred on the candles, no significant formations were observed.
Pattern analysis on the weekly charts shows
the Nifty50 has ended above the short-term 20-period moving average
This means in a routine course of business, we can expect the Nifty50 to test its upper Bollinger band, which stays at 10,990.
It is equally
important to note that this is not likely to happen too fast and without any consolidation or minor corrective moves.
Overall, we expect a
modestly positive start to the week and the market is likely to remain resilient to volatility, if any, inflicted by global markets
We will need to remain cautious about the low volatility that the Nifty is experiencing
The index remains vulnerable to volatile bouts of profit taking at higher levels
We would advise investors to keep buying on dips and at the same time protect profits at higher levels while effectively rotating sectors.
A
study of Relative Rotation Graphs does not paint an overly worrisome picture
The IT pack is losing its relative momentum and is likely to do so in the coming week as well as it takes a breather
On the other hand, the FMCG pack should see a relative outperformance against the broader market
Auto, media, infrastructure and midcap stocks are likely to improve their relative momentum against the broader market
There could also be an overall betterment of relative performance compared with the broader indices such as CNX100, CNX200 and CNX500
All this will collectively prevent the market from any major slide
Metals and realty stocks may see select outperformance, which will remain stock-specific in nature
The energy basket may falter in momentum
No major outperformance is expected from PSU banks, PSEs, Bank Nifty, metals and pharma stocks.
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 the 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 at milan.vaishnav@equityresearch.asia)
