WEEKLY MARKET OUTLOOK FOR AUG 07 THRU AUG 11, 2017
Much as was expected in our previous Weekly note, there much
significant amount of volatility that the Markets witnessed in the week that
has gone by. Still, the benchmark NIFTY continued to post modest gains and has
ended the Week with net gains of 51.90 points or 0.52% on a Weekly basis. We
still maintain and reiterate that the levels of 10114-10150 seem to be very
critical levels for the NIFTY. Unless these levels are breached on the upside
significantly, sustainable up moves will not be seen.
The coming week will see the levels of 10150 and 10230
acting as immediate support levels. Supports will come in at 9960 and 9850
levels.
The Relative Strength Index – RSI on the Weekly Chart stand
at 79.7787 and it has marked a fresh 14-period high. However, we cannot ignore
the fact that this indicator now remains in seriously overbought territory.
Weekly MACD stays bullish while trading above its signal line. No significant
formations were observed on Candles.
There is no dispute to the fact that the Markets are
extremely buoyant and are readying itself for a fresh set of up move. However,
we just cannot ignore the fact that the extremely overbought nature of the
Markets will prevent it from a significant breakout from 10114-10150 levels.
Any attempt will definitely be met with volatile profit taking bouts.
Volatility will remain very much ingrained in the system. Except for some
sector specific stock picks, broad chase of momentum will have very skewed and unfavorable risk to reward ratio for the
market participants.
A study of Relative Rotation Graphs – RRG show that
corrective mood is spreading wider into the broader markets. The coming week
will only see just 3 sectors relatively out-performing the Markets. PHARMA has
considerably improved its performance and is likely to continue to do so. METAL
and IT Stocks will also join this relative out-performance. We will see these
sectors doing good even with strength in the US Dollar that is currently seen.
The broader Markets will continue to lose
momentum. REALTY, FMCG, AUTO etc, are likely to slow down and gradually lose
momentum. We will see ENERGY sector showing some performance in select 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, 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
