WEEKLY MARKET OUTLOOK FOR OCT 23 THRU OCT 27, 2017
The Markets on Thursday traded for an hour in the Muhurat
Session and remained weaker than expected. The NIFTY ended in the red but in
the short week that has gone by, the benchmark NIFTY50 ended the week with
modest gains of 43.40 points or 0.43%. In all probability, we will see limited
upsides in the coming week with the levels of 10250 playing out as the key
resistance zone. The NIFTY is all likely to return in the rectangle formation
trading that that has emerged over past couple of weeks. With the patterns
remaining fractal in nature, such pattern has also emerged on the Daily Chart
as well. Further sustainable up move can be expected only after the Index moves
past the 10250-mark once again in convincing manger.
Coming week will see the levels of 10250 and 10350 playing
out as immediate resistance area for the Markets. Supports come in at 10050 and
9930 zones.
The Relative Strength Index – RSI on the Weekly Chart is
64.7199 and it remains neutral showing no divergence against the price. Daily
MACD continues to remain bearish while trading below its signal line. Apart
from a black body, no significant formations were observed on Candles.
The pattern analysis shows that the Index attempted to
breakout from the small rectangle pattern but has not been able to do so. In
most likelihood, it has returned back to this trading zone and in the coming
week as well, it is likely to remain in this broad trading zone.
Coming week and thereafter, the Markets are likely to remain
more stock specific than ever. We will see highly stock specific select
out-performance. We will see few sectors standing out but the broader indices
are likely to trade with corrective undertone. In all likelihood, the Markets
have entered into the time-correction mode wherein instead of seeing outright
decline in prices, it remains thoroughly range bound and spends considerable
amount of time oscillating in a defined range before breakout once again.
A study of Relative Rotation Graphs – RRG show that while
METAL stocks are likely to show strong relative outperformance, we might see
AUTO, MEDIA and some stocks from MIDCAP
universe trying to consolidate and further improve its relative
out-performance. ENERGY and IT stocks have shown loss of momentum this week and
are likely to do so in coming week as well. PSUBANKS and BANKNIFTY continued to
lag and no major improvement in performance is expected this coming week. FMCG
and PHARMA are likely to see select out-performance as well. FINANCIAL SERVICES and INFRA are expected to
struggle.
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, MSTA is
Consultant Technical Analyst at Gemstone Equity Research & Advisory
Services, Vadodara. He can be reached at milan.vaishnav@equityresearch.asia
Milan Vaishnav, CMT, MSTA
Technical Analyst
(Research Analyst, SEBI Reg.
No. INH000003341)
Member:
CMT Association (Formerly Market Technicians Association, (MTA), USA
Canadian Society of Technical Analysts, (CSTA), CANADA
Society of Technical Analysts, STA (UK)
+91-70164-32277 / +91-98250-16331
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