Market week ahead: Nifty50 won’t see major downside; in no hurry to rise too
, ET CONTRIBUTORS|
Updated: Oct 08, 2017, 12.21 PM IST
The week that went by had volatility totally ingrained in the market on expected lines, but overall it performed much better than expected. In a truncated week, the benchmark Nifty ended with net gains of 191 points, or 1.95 per cent, for the week.
The weekly charts have validated the broader trading pattern that appeared on the daily chart. Just like daily charts, the weekly charts also showed a rectangular pattern. This added credibility to both the patterns, which are fractal in nature.
In the coming week, the market is likely to remain volatile and rangebound, but it may trade with an upward bias. Though no major downside is likely, the top of 10,179 is not likely to be breached too fast.
The Nifty will see the 10,050 and 10,175 levels play out as key resistance next week. Supports should come in at 9,910 and 9,830 levels.
The relative strength index, or RSI, on the weekly chart stood at 61.2419 and it remained neutral showing no divergence from price. The weekly MACD is bearish, as it trades below the signal line. No major formations were observed on the candles.
Pattern analysis indicated that the Nifty50 will remain comfortably in the 18-month-old upward rising channel. However, it is likely that the index will form a rectangular trading range, just like it did on the daily charts.
All in all, given the lead indicators and overall sectoral patterns, we are unlikely to see any major downside in the market during the coming week. At the same time, the Nifty is unlikely to see any runaway rise beyond the previous highs. We expect to see rangebound movement in the market with some volatility ingrained in it.
With no sign of any trend reversal as yet, shorts should be avoided and dips should be utilised to make fresh purchases.
A study of the relative rotation graph or RRG showed metal stocks will continue to outperform relatively in the coming week. Along with this, we may also see good performance from IT and pharma stocks. Media, too, has shown an improvement and select gains are likely in this sector as well.
Highly stock-specific outperformance is likely in the broader market indices such as CNX100 and CNX200, but no major show is expected from FMCG, Realty and PSU banks. Nifty Junior (Nifty Next 50) is likely to lose momentum this week.
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 it 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)
The weekly charts have validated the broader trading pattern that appeared on the daily chart. Just like daily charts, the weekly charts also showed a rectangular pattern. This added credibility to both the patterns, which are fractal in nature.
In the coming week, the market is likely to remain volatile and rangebound, but it may trade with an upward bias. Though no major downside is likely, the top of 10,179 is not likely to be breached too fast.
The Nifty will see the 10,050 and 10,175 levels play out as key resistance next week. Supports should come in at 9,910 and 9,830 levels.
The relative strength index, or RSI, on the weekly chart stood at 61.2419 and it remained neutral showing no divergence from price. The weekly MACD is bearish, as it trades below the signal line. No major formations were observed on the candles.
Pattern analysis indicated that the Nifty50 will remain comfortably in the 18-month-old upward rising channel. However, it is likely that the index will form a rectangular trading range, just like it did on the daily charts.
All in all, given the lead indicators and overall sectoral patterns, we are unlikely to see any major downside in the market during the coming week. At the same time, the Nifty is unlikely to see any runaway rise beyond the previous highs. We expect to see rangebound movement in the market with some volatility ingrained in it.
With no sign of any trend reversal as yet, shorts should be avoided and dips should be utilised to make fresh purchases.
A study of the relative rotation graph or RRG showed metal stocks will continue to outperform relatively in the coming week. Along with this, we may also see good performance from IT and pharma stocks. Media, too, has shown an improvement and select gains are likely in this sector as well.
Highly stock-specific outperformance is likely in the broader market indices such as CNX100 and CNX200, but no major show is expected from FMCG, Realty and PSU banks. Nifty Junior (Nifty Next 50) is likely to lose momentum this week.
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 it 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)
