Nifty week ahead: Metals, auto, pharma may lag; media, bank, realty stocks likely to shine
We had projected in our previous weekly note that despite all the chances of the benchmark Nifty50 trading with an overall positive bias, the index is unlikely to see a runaway rise during the week. In line with these projections, the benchmark Nifty50 ended the week flat with a gain of just 24 points, or 0.27 per cent, on a week-on-week basis.
During the coming week, we expect the market to consolidate in a broad range and the 9,000 level will remain the sacrosanct support. No major downsides are expected and the 53.68 per cent broader-than-normal bands increase the possibilities of the market trading in a range with a drop in volatility.
The 9,250 and 9,375 levels are likely to be key resistance levels going ahead, and supports are expected to come in at 9,110 and 9,020 levels.
The Relative Strength Index or RSI on the weekly chart stood at 69.5533. It has reported a bearish divergence with the Nifty marking a fresh high and the RSI not making it as yet. The weekly MACD remains bullish while trading above its signal line.
The pattern analysis of the weekly charts has shown the Nifty attempting a fresh and long-lasting breakout above the 9,000 zone. However, given the overstretched nature of the market on the daily charts and because of wider-than-normal bands, we may see decreased volatility and the Nifty50 consolidating for some more time in a capped range.
Overall, the uptrend remains intact beyond all doubts. Some geopolitical tensions apart, the market faces no negative risks. Only technical risks, such as the overstretched nature of the market on the charts will keep it under check and a capped range. Consolidation is going to continue for sure.
Some corrective activity will also be witnessed, but it will be in the form of limited downsides and capped movements. Dips may be used to make purchases.
A study of Relative Rotation Graphs or RRG showed we would continue to see outperformance form the Realty and Bank packs in general. The IT pack has been losing momentum and will continue to do so but will attempt and find some bottom at current levels. Metals, Auto and Pharma are likely to lag. We will see some distinct outperformance from Media, Bank Nifty and Realty indices. Relative outperformance from broader indices like Nifty Jr (Nifty Next 50), NIFTY Mdic50 components can also be expected.
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 NIFTY Index and should not be used directly as buy or sell signals.
(Milan Vaishnav, CMT, is Consultant Technical Analyst at Gemstone Equity Research & Advisory Services, Vadodara. Investors are advised to consult their financial advisers before taking any trading calls. Milan can be reached at milan.vaishnav@equityresearch.asia)
During the coming week, we expect the market to consolidate in a broad range and the 9,000 level will remain the sacrosanct support. No major downsides are expected and the 53.68 per cent broader-than-normal bands increase the possibilities of the market trading in a range with a drop in volatility.
The 9,250 and 9,375 levels are likely to be key resistance levels going ahead, and supports are expected to come in at 9,110 and 9,020 levels.
The Relative Strength Index or RSI on the weekly chart stood at 69.5533. It has reported a bearish divergence with the Nifty marking a fresh high and the RSI not making it as yet. The weekly MACD remains bullish while trading above its signal line.
The pattern analysis of the weekly charts has shown the Nifty attempting a fresh and long-lasting breakout above the 9,000 zone. However, given the overstretched nature of the market on the daily charts and because of wider-than-normal bands, we may see decreased volatility and the Nifty50 consolidating for some more time in a capped range.
Overall, the uptrend remains intact beyond all doubts. Some geopolitical tensions apart, the market faces no negative risks. Only technical risks, such as the overstretched nature of the market on the charts will keep it under check and a capped range. Consolidation is going to continue for sure.
Some corrective activity will also be witnessed, but it will be in the form of limited downsides and capped movements. Dips may be used to make purchases.
A study of Relative Rotation Graphs or RRG showed we would continue to see outperformance form the Realty and Bank packs in general. The IT pack has been losing momentum and will continue to do so but will attempt and find some bottom at current levels. Metals, Auto and Pharma are likely to lag. We will see some distinct outperformance from Media, Bank Nifty and Realty indices. Relative outperformance from broader indices like Nifty Jr (Nifty Next 50), NIFTY Mdic50 components can also be expected.
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 NIFTY Index and should not be used directly as buy or sell signals.
(Milan Vaishnav, CMT, is Consultant Technical Analyst at Gemstone Equity Research & Advisory Services, Vadodara. Investors are advised to consult their financial advisers before taking any trading calls. Milan can be reached at milan.vaishnav@equityresearch.asia)
