WEEKLY MARKET OUTLOOK FOR JULY 24 THRU JULY 28, 2017
After a volatile session on Friday, the benchmark NIFTY50
headed really nowhere on Weekly basis as it ended the week with just a modest
gain of 28.90 points or 0.29%. The coming week will see the Markets continue to
consolidate and do so in quite volatile manner. The coming Week is likely to
see the Markets taking a breather and in event of any upward moves, it will
remain extremely vulnerable to profit taking bouts at higher levels. Though the
overall trend remains intact, there are signs galore that the Markets may take
a breather.
The coming week will see the levels of 9980 and 10100 acting
out as potential resistance levels in the event of the Markets attempting an up
move. The supports will come in at much lower at 9830 and 9775 levels.
The Relative Strength Index – RSI on the Weekly Chart is
77.0688 and it remains grossly overbought. The NIFTY has marked a fresh 14-week
high while the NIFTY has not and this has resulted into Bearish Divergence. The
Daily MACD remains bullish while trading above its signal line. On the Candles,
a Hanging Man formation has occurred. This candle has a long lower shadow and
if it occurs during an uptrend which is the case with NIFTY, it often signals
halt in the ongoing up move.
Given the overbought nature of the lead indicators and the
overall structure of the Chart, there are ample signs that point towards likely
stalling of the up move. The Bollinger Bands, which are 47% wider-than-normal
on the Daily Chart also point towards limited gains on Weekly basis in the
coming week. Given the overall structure of the Charts, read along with lead
indicators and F&O data, we reiterate caution and feel that the Markets are
likely to get pushed into consolidation for some more time.
A study of Relative Rotation Graphs – RRG show that METAL
and IT stocks are likely to continue to show vigor and are likely to continue
to relatively outperform the NIFTY. The REALTY, NIFTYJR, and other broader
Indices distinctly continue to lose momentum. Though we may see MEDIA stocks
attempt to consolidate their performance, pocket of outperformance will also be
seen from PHARMA and FMCG stocks. We expect PSUANKS, MIDCAP and IFRA to drag.
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
