Saturday, June 23, 2018



 In our previous Weekly note, we had mentioned about the critical importance of the 10820-10850 zones and likelihood of volatility creeping into the Markets. Much on the expected lines, NIFTY struggled throughout the week to move past this resistance zone of 10820-10850 levels but still ended in between these critical levels. In the meantime, all throughout the week, it continued to resist to this important pattern resistance area. NIFTY ended the week absolutely flat with negligible gains of 4.15 points or 0.04% on weekly basis.
We approach expiry in the coming week and we expect the week to remain dominated with rollover centric activities. Though the NIFTY has fiercely attempted to move past this the resistance zone, it still rules below the 10850-mark. This level, therefore, remains critical for the coming week as well. It would be important for NIFTY to breach this level on the upside for any meaningful up move. Unless this happens, it remains vulnerable to slip into some more consolidation.
Coming week will see the levels of 10890 and 10985 as immediate resistance area. Supports come in lower at 10760 and 10675 zones.
The Relative Strength Index – RSI on the Weekly Chart is 60.8638. It shows no failure swings but shows a mild bearish divergence. This is because RSI has not formed a fresh 14-period high while NIFTY reported a fresh 14-period closing high. However, it is seen attempting to break out of a pattern. Weekly MACD stays bullish while trading above its signal line. A pattern resembling to a Hanging Man occurred on NIFTY. Since this has occurred after a pullback, we might see some stalling of up move in NIFTY. However, this needs confirmation.
Overall, NIFTY still is yet to move past the pattern resistance. This pattern resistance comes in form of a falling trend line which joins the high of 11170 with the subsequent lower tops. Though likelihood of NIFTY breaking out above this pattern resistance is quite high, but until it actually moves past and closes above 10850-mark, we cannot take NIFTY as completely out of the woods. We recommend avoiding shorts and keep overall exposure at modest levels. While extremely selective buying may be done, a cautious approach with a tinge of optimism is what is advised for the coming week. Before taking any major directional call, a confirmation to this attempt of moving past the pattern resistance should be awaited. 

 A study of Relative Rotation Graphs – shows that BANKNIFTY has continued to relatively outperform the general Markets and the PSU Bank pack has continued to further improve its relative momentum. The coming week will see relatively better performance from the BANK NIFTY, PSU Banks to some extent. The Financial Services pack along with Services sector is likely to relatively outperform. Stock specific performance is also likely from FMCG Pack. Though it remains in leading quadrant, it is seen losing its momentum. No improvement on the momentum front is seen in broader Indices like CNX100, 200 and 500 along with NIFTY JR., and NIFTY MIDCAP universe. REALTY might see some individual performances. No major show is expected from AUTO and METAL Pack. PHARMA is likely to remain strong and improve its relative out performance.
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, CMT, MSTA
Technical Analyst
(Research Analyst, SEBI Reg. No. INH000003341)
CMT Association (Formerly known as 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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