WEEKLY MARKET OUTLOOK FOR DEC 25 THRU DEC 29, 2017
The previous Week remained much volatile owing to outcome of
Gujarat Elections but speaking on a overall note, it ended on
better-than-expected note. The benchmark NIFTY50 ended with net gains of 159.75
points or 1.55% on a weekly basis. We expect this positive intent to continue
but we still see all chances that the clean breakout may still await the
Markets despite the Index ending at a life-time closing high. The next week
remains a short week with Monday remaining a trading holiday. Next week will
still remain susceptible to profit taking at higher levels as Markets awaits a
clean break out. Also, bearish divergence persists on the lead indicators.
The next week will see the levels of 10535 and 10670 playing
out as major resistance levels. The supports come in at 10410 and 10280.
The Relative Strength Index – RSI on the Weekly Chart is
63.6098. A bearish divergence is evident on this indicator as the NIFTY has set
a fresh 14-period high while the RSI has not. Also, it has continued to form
lower tops and is yet to breakout from this formation. The Weekly MACD is still
bearish while it trades below its signal line. No major formations were
observed on Candles.
Overall, though the Markets may have ended at a life-time
Closing high, it is evident that the clean breakout is still awaited. There are
two factors that would weigh against the Markets achieving a clean break out.
First, in an instance the Markets inches higher, it will encounter pattern
resistance of the 22-month long rising trend line. Secondly, there is clear
Bearish Divergence on the lead indicators which may prevent the Markets from
either giving a clean break out or from sustaining it at higher levels.
Cumulatively speaking, all these factors keep the Markets still exposed to
corrective profit taking bouts at higher levels. We recommend continuing to
approach Markets on a cautious note with protecting profits at each higher
level.
A study of Relative Rotation Graphs – RRG show that AUTO
pack has shown considerable improvement in its relative performance. This is
likely to continue in the coming week as well. Along with this, the MIDCAP universe
is likely to outperform along with the broader markets. METAL and PHARMA are
evidently losing momentum and this under-performance is likely to be seen in
the coming week as well. The FMCG, REALTY, PSUBANK and MEDIA will see their
select components relatively out-performing the Markets. ENERGY pack is not
likely to see any major action this coming week.
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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