WEEKLY MARKET OUTLOOK FOR JAN 15 THRU JAN 19, 2018
After many range bound oscillations in the previous week,
the benchmark NIFTY50 ended the week with a small up-tick as it ended with net
gains of 122.40 points or 1.16%. Most of the entire previous week was spent by
the Markets consolidating in a defined range after it achieved its breakout
from the 10490 zones. In the coming week, we might see the Markets continuing
to trade in a defined range with a upward bias. As indicated by F&O data,
the NIFTY is likely to advance to test its 24-month rising trend line and
following that, might see some corrective moves. The possibility of the NIFTY
testing levels of 10750-10800 zones cannot be ruled out, though it may do so
amid intermittent minor corrective moves.
The coming week will see the levels of 10750 and 10835
levels acting as possible resistance on the upside. Supports are likely to come
in at 10600 and 10535 levels.
The Relative Strength Index – RSI on the Weekly Chart is
68.8730. A Bearish Divergence is observed as the NIFTY formed a fresh 14-period
high while the RSI did not. Weekly MACD is bullish as it trades above its
signal line. A Rising Window occurred on Candles. This is essentially gap and
often results into continuation of up move.
The pattern analysis shows that the up move in NIFTY remains
secularly in place. It is continuing to post higher highs amid intermittent
consolidations and it may continue to doing so. However, around 10800-mark, it
may face very stiff resistance to its 24-month long upward rising trend line.
Overall, if we take a immediate short term week for next 2-3
weeks while we approach the Union Budget by that time, we may see some run-up
continuing. However, in great likelihood, the Markets will not disregard the
serious resistance of 24-month long trend line that it will approach in the
process. We recommend that while making select purchases with each
consolidation or minor corrective move that we witness, the up moves should
also be utilized in realizing profits at higher levels and lighten the
portfolios as we approach the 10800-mark. Any moves following that should be
made to re-balance the portfolios or re-allocate the trading positions.
A study of Relative Rotation Graphs – RRG that PSUBANKS are
evidently slowing down on momentum on a weekly note. We will continue to see
MEDIA, REALTY, AUTO along with NIFTY Next 50 attempting to relatively
out-perform the Markets. Service Sector stocks along with FMCG are attempting
to consolidate its performance and may continue to do so in coming week as
well. PHARMA has been underperforming over past several weeks and may remain an
under performer on a Weekly basis. METALS and MID CAP Universe along with IT
may see stock specific out-performances against the general Markets.
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@equityresearch.asia
Milan Vaishnav, CMT, MSTA
Technical Analyst
(Research Analyst, SEBI Reg.
No. INH000003341)
Member:
CMT Association (Formerly Market Technicians Association, (MTA), USA
Canadian Society of Technical Analysts, (CSTA), CANADA
Society of Technical Analysts, STA (UK)
+91-70164-32277 / +91-98250-16331
