WEEKLY MARKET OUTLOOK FOR JULY 31 THRU AUG 04, 2017
Though the week that has gone by has remained extremely
volatile, the benchmark NIFTY50 has managed to end the week with net gains of
99.25 points or 1% on a weekly note. The coming Week will, by all means, remain
exiting. The Markets have demonstrated extremely buoyant intent and at the same
time has now become extremely overbought. The coming week will see the Markets
continue to attempt to mark fresh highs but at the same time, we will see good
amount of volatility also creeping in to the Markets. Despite buoyant intent,
the participants will have to remain ready to face volatile profit taking bouts
as well from higher levels.
We will see the levels of 10114 and 10300 acting as likely
resistance levels for the coming week. The supports will be seen coming in at
9790 and 9710 zones.
The Relative Strength Index – RSI on the Weekly Chart stand
at 78.8795 and they have marked a fresh 14-period high which is bullish. However,
it trades in extremely overbought range. The Weekly MACD continues to stay
bullish while comfortably trading above its signal line. No significant
formations are observed on Weekly Candles.
Overall, there is no doubt that the inherent buoyancy in the
Markets will remain intact. In the same breath, we cannot ignore the overbought
nature of the Markets. It is further nearly certain that we will see high
volatility in coming week and we will also continue to remain exposed to
volatile profit taking bouts from each higher level the Markets scales. In the
given circumstances, while shorts may be very strictly avoided, Markets
participants will have to keep trailing protective stop loss levels to chase
the momentum in a protected manner.
A study of Relative Rotation Graphs – RRG show that this
coming week as well, we will see continued relative out-performance from the
METAL Stocks. Despite weak US Dollar, the IT stocks will also consolidate and
attempt to post relative out-performance and no major weakness will be seen in IT
Stocks. We will see FMCG taking a breather and PHARMA as well will be seen
losing sheen baring few selective stock out-performances. ENERGY stocks will
continue to see pick up in momentum. No major out-performance is expected from
INFRA, Small Caps, PSU Banks and Realty. Selective stock specific action will
be seen in Auto.
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
