WEEKLY MARKET OUTLOOK FOR JUNE 05 THRU JUN 09, 2017
In line with the analysis carried out in our previous Weekly
Note, the benchmark NIFTY50 did not make any major headway as it ended the week
with net gains of 58.40 points or 0.61%. It is important to note that the
Markets have displayed steadfast buoyancy in the week that has gone by. In the
coming week as well, we will see the Markets attempting to mark fresh highs but
at the same time, we would prefer to remain cautious at any moment, the Markets
may be subjected to some very short term corrective action given the overbought
nature of the Markets.
For the coming week, the levels of 9690 and 9780 are the
likely resistance levels. The supports come in much lower at 9550 and 9510
zones.
The Weekly Relative Strength Index – RSI is 76.9547.
Although it is bullish as it has marked a fresh 14-period high, it trades in
“overbought” territory. The Weekly MACD is bullish but it also now trades in
“overbought” territory.
The pattern analysis very visibly shows a breakout from a
Inverted Head & Shoulder formation remaining perfectly in force. However,
given the overbought nature of the lead indicators, it also point towards some
impending very short corrective action that can happen any time.
There is no disputing the fact that the Markets are
displaying state of steadfast buoyancy. However, we cannot ignore that fact
that the Markets currently is overbought on all possible lead indicators and
this makes some onset of corrective activity very much imminent and long
overdue. Such consolidation may happen in the form of sideways range bound
movements coupled with sharp bouts of profit taking from higher levels. We
reiterate keeping exposures moderate and stock specific and adopt caution for
the week coming ahead.
A study of Relative Rotation Graphs – RRG show that though
select pocket of REALTY Stocks will show relative out-performance, the overall
momentum is likely to slow down. We will see PHARMA, IT and METAL not making
any major headway but will just continue to consolidate its performance in
coming week. The ENERGY and MEDIA pack too is likely to relatively under-perform. We expect PRIVATE BANKS,
FINANCIAL SERVICES Stocks, and FMCG coupled with select AUTO stocks relatively
outperforming in the 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, 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
