WEEKLY MARKET OUTLOOK FOR JANUARY 09 THRU JANUARY 13, 2017
With the Close of Friday’s
session, the NIFTY ended the week with net gains of 58 points or 0.71% on Week-on-week basis. In our previous
weekly note, we had mentioned that we expect the Markets to consolidate with
positive bias. The trend for the previous week remained on the analyzed lines.
The NIFTY consolidated while continuing to resist at its 200-DMA at Close
levels on the Daily Charts. However, it did give a higher top and higher bottom
on the Weekly bar Charts, and continued to consolidate as well. Beginning this
week, we expect a stable and positive start to the Markets but at the same
time, we also expect the NIFTY to continue to consolidate and the levels of
8250 will remain critical to watch for on Weekly bias as it has slight
potential to create resistance.
For the coming week, the
NIFTY will find resistance at 8275 and 8380 levels and supports will come in at
8205 and 8150 levels.
The RSI—Relative Strength Index
on the Weekly Chart is 48.0201 and it remains neutral as it shows no bullish or
bearish divergence or any failure swing. The Daily MACD remains bearish as it
trades below its signal line. However, it has flattened out and has started to
move up. On the Candles, a spinning top occurred. This is typically a sign of either indecisive
trade which often is the result of some overall consolidation on Weekly basis.
The pattern analysis throws
an optimistic picture. It did show that
the bottoms at 7900-7920 has been formed. The NIFTY maintained its Close inside
the lower Bollinger Band on the Weekly Charts. Further, as mentioned in our
previous weekly note, this level also signified a 50% retracement of the total
rise from 6900-8968 levels. The NIFTY has formed a base around this zone of
7900-7920 and has attempted to move up. The overall reading is that the NIFTY
has certainly formed a immediate bottom around these levels but it is yet to confirm his bottom and confirm a subsequent reversal. No structural breach on
the pattern or the lead indicators is observed as of today.
Overall, like previous week,
we expect the NIFTY to maintain a positive bias and consolidate. The levels of
8250-8275 zones will be critical to watch out for on Weekly basis. Further, it
would be also important to see that the NIFTY moves past and closes above its 200-DMA on a Daily note. Once done, it
will lay impetus to the NIFTY’s attempt to confirm this bottom. We continue to
reiterate to make select purchases with any dip and focus on some sectoral
rotation that is quite evidently seen.
A study of Relative Rotation Graphs – RRG suggest just like
previous week, ENERGY and METAL will continue to relatively outperform the
overall Markets but will be seen losing some momentum as well. CNXIT – though it
under-performed against expectations in the previous week giving knee-jerk
reaction to the negative news flows, it is likely that it once again
consolidate its performance and attempt to further improve. FMCG and select
PHARMA will continue to display some relative strength. AUTO too would attempt
to improve its relative performance. Some key components from NIFTYMID50 and
PSUBANKS might distinctly underperform this 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
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.