Thursday, May 4, 2017

WEEKLY MARKET OUTLOOK FOR MAY 01 THRU MAY 05, 2017

WEEKLY MARKET OUTLOOK FOR MAY 01 THRU MAY 05, 2017
The Indian Equities had much better-than- expected week as despite consolidation in the initial days, the benchmark NIFTY50 ended the week on a buoyant note putting on net gains of 184.65 points or 2.02% on Weekly basis. On expected lines, select out-performance was seen from MIDCAPS and BANKS, and some consolidation of performance was seen from AUTO. In the coming week, the picture is clear. There are all signs of consolidation on the Daily Charts and virtually no signs of any reversal of the primary uptrend on Daily or Weekly Charts. This translates into buoyant outlook in the coming week. We can expected a fierce consolidation with some volatility given the overbought nature of the Markets but no significant downsides are expected.

The levels of 9360 and 9450 will act as resistance for the coming week while supports will come in at 9220 and 9150 zones.

The Weekly RSI is 70.0947 and it is bullish as it has marked a fresh 14-period high though it is mildly overbought. The Weekly MACD continue to remain bullish as it trades above its signal line.

The pattern analysis on the Weekly Charts presents a buoyant picture. It shows the NIFTY resuming its up move again after a brief sideways consolidation after the main breakout from the triple top formation. However, given the overbought nature of the Markets on Weekly Charts and multiple pattern resistance on the Daily Charts, we may see the Markets spending some time in the broad range.

All and all, it is extremely important to note that though we may continue to see some intermittent profit taking bouts given the multiple pattern resistances that the Markets may encounter, there are no signs of reversal of the primary uptrend. We may also see some volatility creeping in over next week. However, all corrective actions should be contiued to utilized to make fresh purchases. The 45% wider-than-normal bands may not allow runaway rise for the NIFTY but the inherent structure of the Markets remain bouyant.

A study of Relative Rotation Graphs – RRG show that PSUBANKS and BANKNIFTY are significantly expected to further improve the relative out-performance with NIFTY. The AUTO Stocks and ENERGY universe is also expected to outperform. PHARMA is likely to continue to lag and METALS and IT Stocks are expected to remain weaker. Financial Services and MIDCAP universe will see pockets of select out-performance. INFRA and FMCG are expected to consolidate.

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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