Saturday, November 12, 2016

Weekly Technical View - NIFTY - November 14 thru November 18, 2016

WEEKLY MARKET OUTLOOK FOR 15th  to 18th  NOVEMBER  2016
Relative volatility continued on Indian bourses as the NIFTY ended with a deep cut on Friday while on week-on-week basis, it ended with a net loss of 137.45 points or 1.63%, though the intra-week band remained quite volatile and wide. Coming week, we  will see our Markets opening on Tuesday as Monday is a trading holiday and NIFTY will have adjustments to make of the Monday’s trade that will take place. Keeping this in view along with major technical indicators, we expect NIFTY to achieve and remain stable while attempting to find base and bottom. The NIFTY had seen a one-way 600-odd point recovery and therefore, what we saw on Friday was profit taking from higher levels. This volatile movement will happen but overall, it is expected that NIFTY will find some bottom in coming week.

For next week, the levels of 8460 and 8525 will act as immediate resistance levels. The supports are expected to come in at 8200 and 8125 levels. This broad range will be the functional range in coming week.

The RSI—Relative Strength Index on the Weekly Chart is 45.2572 and it has reached its lowest value in last 14-periods which is bearish. It does not show any bullish or bearish divergence. The Weekly MACD stays bearish as it continues to trade below its signal line. On Candle, a not-so-classical long lower shadow occurred. Though it does not have its text-book perfect formation, it cannot be ignored as it has appeared during a downtrend. We will require a while candle following week confirming this formation but it certainly throws up potential base formation at current levels.

Coming to pattern analysis, the NIFTY has continued with its weekly decline for the third consecutive week and has remained in a small falling channel drawn from 8968 levels. It has a major support at 8200-mark which is a 100 Week Moving Average and it is expected that this level will hold at Close as its major support.

All and all, as of now, NIFTY has grossly underperformed its peers and speaking purely on technical note, we can fairly expect that the NIFTY will find base around current levels and in event of any downsides the 100-WMA will act as major support at Close levels and recent lows will not be broken. With many of the key NIFTY components showing potential reversals on Weekly Charts, picking key stocks will hold the key for coming days. All dips should be continued to be used for making selective purchases. No panic reaction stands warranted at this stage.


A study of Relative Rotation Graphs – RRG suggest Pharma, Services and FMCG stocks will attempt to find base at current levels while IT stocks are expected to show resilience on week-on-week basis in coming week. Metals will be seen maintaining some momentum while stock specific outperformance will be seen from CNXMID50, Auto and CNXMID stocks. PSU banks are also expected to maintain momentum and remain at lease neutral on week-on-week basis.

 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
Technical Analyst
(Research Analyst, SEBI Reg. No. INH000003341)
Member
Market Technicians Association, (MTA), USA
Canadian Society of Technical Analysts, (CSTA), CANADA
Association of Technical Market Analysts, (ATMA), INDIA

http://milan-vaishnav.blogspot.com

+91-98250-16331 



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