Home Stock Week Forward: NIFTY Vulnerable to Consolidation at Increased Ranges; Keep Selective and Shield Income | Analyzing India

Week Forward: NIFTY Vulnerable to Consolidation at Increased Ranges; Keep Selective and Shield Income | Analyzing India

Week Forward: NIFTY Vulnerable to Consolidation at Increased Ranges; Keep Selective and Shield Income | Analyzing India


It’s precisely a month from when the NIFTY staged a significant breakout, crossing above the earlier excessive level of 18887; this time, it was the fourth week in a row the place the markets prolonged their positive aspects. This has additionally led to the markets closing at their recent document lifetime highs as nicely. Whereas some indicators of gentle consolidation seem on the shorter timeframe charts, the NIFTY stays in a agency uptrend submit the breakout on the weekly charts. The buying and selling vary expanded; the NIFTY oscillated in a 428-point vary over the previous 5 days. The headline index lastly closed with a web achieve of 180.50 factors (+0.92%) on a weekly foundation.

The breakout that the NIFTY achieved a month in the past is a significant one; that is evidenced by the sturdy upward momentum that the markets have witnessed over the previous 4 weeks. Nevertheless, evaluation of the shorter timeframe, i.e. each day charts, reveals that the NIFTY may be in for some ranged consolidation. This interprets into the week’s excessive level of 19991.85 appearing as a brief resistance, and a high for the markets, except taken out convincingly. The volatility additionally elevated; INDIAVIX edged greater by one other 7.51% to 11.48. Regardless of this surge, VIX remains to be close to one in all its lowest ranges seen over the previous months.

The approaching week additionally has a month-to-month derivatives expiry lined up; the times would stay influenced by rollover-centric actions. The week is prone to see a tepid begin; the degrees of 19850 and 20000 are appearing as potential resistance factors. The helps are available at 17610 and 19470 ranges.

The weekly RSI is 73.51; it has fashioned a brand new 14-period excessive and stays impartial, not exhibiting any divergence in opposition to the worth. The weekly MACD is bullish and remains to be above the sign line.

A candle resembling a “Capturing Star” has emerged on the charts. This requires affirmation; this shall be confirmed if a decrease low is fashioned over the approaching week. The present formation has the potential to stall the present rally and push the markets into some ranged consolidation.

The sample evaluation reveals that the NIFTY staged a significant breakout by crossing above 18887; this was a breakout from a big ascending triangle fashioned over the previous ten months. The markets could take a breather; nevertheless, this breakout will keep intact and in pressure as long as NIFTY retains its head above 18900 ranges. As long as the 18900 ranges are protected, the markets are unlikely to indicate any main drawdowns from the present ranges.

All in all, it’s past an iota of doubt that the first uptrend and the breakout that the markets achieved are nonetheless very a lot intact. Nevertheless, there are some indicators that the markets may presumably take a breather and consolidate inside an outlined and restricted vary. This requires that we undertake a extremely stock-specific method and navigate the markets on a extremely selective notice. As we accomplish that, income on the present holdings must also be protected vigilantly at present and better ranges. A cautious method is suggested for the approaching week.

Sector Evaluation for the Coming Week

In our take a look at Relative Rotation Graphs®, we in contrast varied sectors in opposition to CNX500 (NIFTY 500 Index), which represents over 95% of the free float market cap of all of the shares listed.

The evaluation of Relative Rotation Graphs (RRG) reveals that NIFTY Auto, Midcap 100, Consumption, and Realty Indices are contained in the main quadrant. Aside from the Midcap 100 Index, the opposite teams are exhibiting a decline of their relative momentum in opposition to the broader markets.

The NIFTY PSE, Infrastructure, and NIFTY FMCG index are contained in the weakening quadrant. Inventory-specific efficiency could also be seen from these teams.

BankNifty, Nifty Commodities, Monetary Companies, and the Companies Sector index are languishing contained in the lagging quadrant and should comparatively underperform the broader markets. The IT Index can also be contained in the lagging quadrant, however will be seen persevering with to enhance its relative momentum in opposition to the broader markets.

The Pharma Index has rolled contained in the enhancing quadrant; it could have begun its section of enhancing relative efficiency in opposition to the broader markets. The Nifty Power, Media, and Metallic Indices are additionally contained in the enhancing quadrant.

Vital Word: RRG™ charts present the relative power and momentum of a gaggle of shares. Within the above Chart, they present relative efficiency in opposition to NIFTY500 Index (Broader Markets) and shouldn’t be used straight as purchase or promote indicators.  

Milan Vaishnav, CMT, MSTA

Consulting Technical Analyst

www.EquityResearch.asia | www.ChartWizard.ae

Milan Vaishnav

In regards to the writer:
, CMT, MSTA is a capital market skilled with expertise spanning near twenty years. His space of experience consists of consulting in Portfolio/Funds Administration and Advisory Companies. Milan is the founding father of ChartWizard FZE (UAE) and Gemstone Fairness Analysis & Advisory Companies. As a Consulting Technical Analysis Analyst and along with his expertise within the Indian Capital Markets of over 15 years, he has been delivering premium India-focused Impartial Technical Analysis to the Shoppers. He presently contributes every day to ET Markets and The Financial Occasions of India. He additionally authors one of many India’s most correct “Every day / Weekly Market Outlook” — A Every day / Weekly Publication,  at present in its 18th 12 months of publication.

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