Sunday, May 21, 2017

WEEKLY MARKET OUTLOOK FOR MAY 22 THRU MAY 26, 2017

WEEKLY MARKET OUTLOOK FOR MAY 22 THRU MAY 26, 2017
The Indian Equities consolidated on Friday with nominal gains of 1.55 points. In our previous Weekly note, we had mentioned that we do not expect any significant weekly gains given the overbought nature of the Markets. In line with this, the benchmark NIFTY50 ended the week with minor gains of 27 points of 0.29% on weekly basis. In the coming week, we do not expect any runaway rise in the Markets. The overbought indicators and the expiry week will dominate the directional bias that the Markets will take. We expect minor corrective actions with limited downsides and consolidation to continue through the coming week.

The levels of 9490 and 9550 are expected to pose stiff resistance. The supports are expected to come in at 9350 and 9280 zones.

The Relative Strength Index – RSI on the Weekly Chart is 72.3968. It is bullish as it has made a fresh 14-period high but it trades in overbought territory. The Weekly MACD is bullish but it appears to be losing momentum to some extent. On the Candles, a long upper shadow occurred. This has bearish implications and it is significant as such formation has occurred near high levels. It has potential to continue to temporarily halt the up move.

The pattern analysis depicts a buoyant but a tired picture. The Markets broke out on the upside from the triple top formation and has been inching upwards since then. However, at present, the lead indicators are oversold and some signs of minor fatigue are evident.

All and all, though the Markets have kept its primary trend intact on the upside, there are chances that we see minor corrective actions and consolidation continuing through the coming week. The rollovers will dominate the coming week while some outperforming sectors will take some breather, we can expect good performance in select stocks from AUTO, Banks and Pharma.

A study of Relative Rotation Graphs – RRG show that in the coming week, AUTO and PSUBANKS will continue to improve their relative outperformance with NIFTY. ENERGY and SERVICE stocks will further slowdown in their momentum. CNXIT and PHARMA may relatively under performing in coming week. METALS will look to consolidate its performance and we will also see select out-performance from the NIFTY NEXT50 pack.

Important Note: RRG™ 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
Technical Analyst
(Research Analyst, SEBI Reg. No. INH000003341)
Member
Market Technicians Association, (MTA), USA
Canadian Society of Technical Analysts, (CSTA), CANADA

+91-98250-16331 



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