Saturday, October 28, 2017

WEEKLY MARKET OUTLOOK FOR OCT 30 THRU NOV 03, 2017

WEEKLY MARKET OUTLOOK FOR OCT 30 THRU NOV 03, 2017
Despite and attempted breakout in the week that has gone by, the Friday’s session remained much subdued as the Markets consolidated on expected lines. We had expected the benchmark NIFTY50 to post modest up moves and in line with this analysis, the NIFTY ended this week with net gains of 112.20 points or 1.10% on Weekly basis. The Markets did attempt to give a breakout from the broad trading range but still saw no convincing gains after that. In the coming week, we expect that the Markets still has potential to keep giving marginal highs but any serious up move may still continue to elude us. Coming week is likely to continue to remain more stock specific in nature.

The levels of 10360 and 10490 will play out as immediate resistance area in the coming days. Supports come in at 10200 and 10060 zones.

The Relative Strength Index – RSI on the Daily Chart  is 68.5187. There is an evident Bearish Divergence on this indicator that shows that the NIFTY has marked a fresh 14-period high while RSI did not. The Daily MACD stays bearish while trading below its signal line. No significant formations are observed on Candles.

The pattern analysis shows that the Index has attempted a breakout but is evidently lacking the conviction. More so, going ahead, it may also resist the 18-month old rising trend line as seen on the Charts. All these may force the Markets into consolidation at higher levels.
All in all, we cannot ignore the buoyant undercurrents that are flowing in the Markets. 
However, also we cannot ignore are the divergent signals on the lead indicators, the fatigue that is evident and the other technical factors which say that the NIFTY may continue to give marginal highs in coming days but it is bound to face consolidation at higher levels as well. 
Overall, the coming week is likely to remain stock specific and we may continue to witness capped upsides and ranged consolidation over coming week.

A study of Relative Rotation Graphs – RRG show that while METAL stocks have continued to relatively out-perform, the momentum is seen fizzling out. Coming week will see sharp relative out-performance from MEDIA, INFRA and PHARMA Stocks. ENERGY stocks too are seen losing momentum. No significant out-performance is now expected from PSU and Private Banks. While FMCG, SERVICE  and REALTY stocks will consolidate, the broader MIDCAP universe will see select outperformance. Some momentum may now also be seen in AUTO 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, 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)


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