WEEKLY MARKET OUTLOOK FOR JULY 17 THRU JULY 21, 2017
Yet another peak was scaled by NIFTY on Friday and it ended
the Week on a very buoyant note. The benchmark ended the week with net gains of
220.55 points on week on week basis. The Markets remain overbought and
therefore warrants high degree of alert at higher levels. The liquidity is
likely to continue to chase the momentum but in the same breadth, we have all
the chances of positive consolidation happening in the Markets and any unabated
rise will make the Markets prone to equally sharp profit taking bouts.
The coming week will see the levels of 9930 and 10150 as
likely resistance levels for the Markets. Supports come in much lower at 9820
and 9760 zones.
The Relative Strength Index – RSI on the Weekly Chart is
76.5246. While NIFTY has posted a fresh 14-period high, the RSI has not done so
and this has resulted into Bearish Divergence. The Weekly MACD stays bullish
while trading above its signal line. No significant formations are observed on
Candles.
The pattern analysis indicates the buoyancy dominating the
Markets. The NIFTY remains into upward rising channel and is all likely to keep
the original trend intact while having some chances to consolidate.
All and all, despite overall buoyancy remaining intact in
the Markets, we cannot completely rule out the possibilities of consolidation
in the Markets. Consolidation, if any, will remain in a capped range with
limited downsides. We reiterate that with the primary trend remaining intact,
shorts should be avoided. Cash should be preserved while adopting high degree
of caution at higher levels.
A study of Relative Rotation Graphs – RRG very clearly show
that REALTY Index has predominantly weakened and this week as well, it will
continue to lose momentum on relative terms. The coming week will see action in
FMCG and IT which are likely to relatively out-perform the Markets. PHARMA too
is likely to continue to sharply improve its relative out-performance against
NIFTY. Relative under-performance is likely to be seen in broader indices like
CNX100, CNX200 and CNX500 and NIFTY
Junior stocks. MEDIA and INFRA stocks may to under-perform. Some pockets of
out-performance may be seen from Private banks and Services stocks.
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, is
Consultant Technical Analyst at Gemstone Equity Research & Advisory
Services, Vadodara. He can be reached at milan.vaishnav@equityresearch.asia)
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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