The index had a buying and selling vary of 281-odd factors all through the week and slipped from its excessive level as soon as once more to finish within the pink. This was the second week in a row the place the Nifty confronted fierce resistance within the 15,850-15,900 zone and retraced from that degree. The headline index lastly closed with a web lack of 32.40 factors or 0.21 per cent on a weekly foundation.
Although the decline on a week-on-week foundation was simply modest, the present week was mildly damaging for the Nifty. The index has slipped and closed barely beneath the rising trendline assist. This trendline begins from the lows of March 2020 and joins subsequent greater bottoms. Unless the index crawls above this sample assist (now a probable resistance) as soon as once more, the market will keep liable to corrective strikes. The volatility as represented by India VIX noticed a spike of seven.05 per cent on a weekly notice. It rose to 12.94, which additionally remains one of many lowest ranges seen within the latest previous.
The coming week can be tactically essential for the market. The Nifty will see the degrees of 15,780 and 15,900 performing as resistance factors; the helps are available in at 15,550 and 15,400.
The weekly RSI is 65.14; it stays impartial and doesn’t present any divergence in opposition to the value. The day by day MACD is bullish and above the sign line. However, the Histogram is flat, indicating complete absence of momentum on the upside. No vital formations have been noticed on the candles.
The sample evaluation reveals a modest violation of the essential sample assist. This sample assist is within the type of an upward rising trendline that begins from the low level in March 2020 and joins the next greater bottoms. Following a gentle violation, the Nifty might now face resistance from this trendline going forward until it manages to crawl again above this.
The market breadth remains internally weak. Also, the inner power and momentum have been lacking throughout all technical pullbacks, and this remains a priority. We advocate persevering with to trace the markets cautiously. It can also be prompt that aggressive positions on both facet, lengthy or quick, ought to be prevented until the market takes a directional name from the current stage of consolidation.
In our look at Relative Rotation Graphs®, we in contrast numerous sectors in opposition to CNX500 (Nifty500 Index), which represents over 95% of the free float marketcap of all of the shares listed.
The evaluate of Relative Rotation Graphs (RRG) reveals combined sectoral developments available in the market. On one hand, the excessive beta sectors are additionally doing good and on the opposite facet, the defensive ones like FMCG and consumption have began to search for as soon as once more.
Nifty Pharma stays within the main quadrant, however it’s seen persevering with to surrender on its relative momentum. Besides this, Nifty PSU Bank index has entered the main quadrant. Nifty PSE index and Nifty Energy index are additionally contained in the main quadrant and will comparatively outperform the broader markets.
The steel index is contained in the weakening quadrant, and so is the Nifty MidCap 100 index.
Nifty Infrastructure index is contained in the lagging quadrant and doesn’t seem like making any main headway. Nifty Realty, companies sector, and Nifty Bank index are additionally contained in the lagging quadrant. However, they’re enhancing on their relative momentum in opposition to the broader markets together with the Nifty Financial Services index.
Nifty IT index is contained in the lagging quadrant. However, it’s seen trying to consolidate its efficiency. The Nifty FMCG and consumption indices that have been paring their relative momentum in opposition to the broader Nifty500 index over the previous many weeks are seen wanting up as soon as once more. Nifty Media index additionally stays agency contained in the enhancing quadrant.
Important Note: RRG™ charts present the relative power and momentum for a bunch of shares. In the above chart, they present relative efficiency in opposition to Nifty500 index (broader markets) and shouldn’t be used instantly as purchase or promote indicators.
(Milan Vaishnav, CMT, MSTA is a Consultant Technical Analyst and founding father of Gemstone Equity Research & Advisory Services, Vadodara. He might be reached at [email protected])