WEEKLY MARKET OUTLOOK FOR FEBRUARY 13 THRU FEBRUARY 17,
2017
The NIFTY ended the previous
Week with modest gains of 52.60 points or 0.60% while it played host to lots of
volatility in the trade. Since last two weeks, the Markets are grappling with
divergent signals the Daily Charts and
the Weekly Charts. This has prevented the Markets from giving a run-away rise.
The coming week will see the overbought Markets struggling with relatively
stable and bouyant Weekly Charts which are also approaching their major pattern
resistance levels. We are likely to see stable opening on Monday but the
overall structure of the Charts are likely to prevent any runaway rise withough
any consolidation or some corrective actions.We have been raising caution of
intermediate profit taking bouts and this coming Week will also see such phenomenon
prevailing in the Markets.
In the coming week, 8830 and
8945 will broadly act as resistance levels for the Markets. The supports will
come in at 8720 and 8650 levels.
The Relative Strength Index –
RSI on the Weekly Charts is 62.5292 and it has formed a fresh 14-period high
which is Bullish. It does not show any divergence against the price. The Weely
MACD is bullish and trades above its signal line post reporting a positive
crossover in the previous week. The Candles show a Spinning Top. This
often signifies either a indescisive session or a session which continues to
witness resistance at higher levels and often leads nowhere.
Pattern analysis draws an
important picture. The NIFTY had retraced to 7900-lows post formation of a
Double Top formation in September 2016. This is a reversal formation and it did
make NIFTY retrace nearly over 1000-odd points as it came off from 8968 levels.
The NIFTY is approaching this mark again and even if we see a bouyant intent of
the Markets, the breaching of this important pattern resistance level on the
upside cannot be without any intermediate corrective activity. More so, when
the NIFTY is trading “overbought” on the Daily Charts which makes some broad
consolidation or some correction even more likely and imminent.
Overall, despite buoyant intent, we will need to approach this week with extreme caution. One thing that
is most likely to be seen would be the profit taking from the sectors that have
gained since previous couple of weeks into fresh improving sectors. With the
results out for most of the key stocks, we will see such rotation quite
evident. Given this reading, and also taking into account the fact that intermittent profit taking bouts will continue to remain imminent, protection
of profits at higher levels and effectively rotating the investments will hold
the key to the coming expectedly volatile week.
A study of Relative Rotation Graphs – RRG shows NIFTYIT pack
will further consolidate it loss of momentum witnessed previous week and will
continue to relatively outperform. We had mentioned in our previous Weekly note
that the IT Pack is expected to digest the headwinds from the US and will attempt
to improve. NIFTY IT ended the previous week with hefty gain of 362.05 points
or 3.61%. SMALL CAP, which strengthened its performance previous week, is
expected to continue with its relative outperformance along with INFRA stocks.
PHARMA remained evidently weak and are likely to remain so on week-on-week
basis. We are likely to see gains in REALTH and PSUBANK pack as well. ENERGY is
likely to further slowdown its pace along with METAL stocks. We will also see
select outperformance from the FMCG pack as well.
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.