Saturday, March 4, 2017

WEEKLY MARKET OUTLOOK FOR FEBRUARY 27 THRU MARCH 03, 2017

WEEKLY MARKET OUTLOOK FOR FEBRUARY 27 THRU MARCH 03, 2017
The Markets on Thursday saw sharp volatility especially in the second half of the session which was much because of the expiry led rollovers. With the short week that came to an end on Thursday, the NIFTY posted decent gains of 117.80 points or 1.34% on Weekly basis. This Week also remained highly eventful as the NIFTY posted fresh 52-week highs while it also approached key resistance area. On the top of it it formed some interesting patterns  as well. In the Week that went by, NIFTY continued to advance to its logical expected targets of 9000-mark as it posted its Weekly high of 8982.15. In this short week, the Markets has ensured that we see the coming next week remaining as eventful and volatile as  the previous week. On Monday, we see a tepid start to the Markets and some modestly negative opening will be expected. The 8968-9000 zones will remain key resistance area for the immediate short term. We can see some corrective activities persisting and this will also lead to some existance of sharp volatility in the Markets.

For the coming week, the levels of 8990 aand 9195 will be the broad resistance area  for the Markets. The supports will be seen coming around 8845 and 8750 levels.

The Relative Strength Index – RSI on the Weekly Chart is 65.8732 and it has reached its highest value in last 14-periods which is Bullish. It does not show any bullish or bearish divergence as against the price. The Weekly MACD remains bullish as it trades above its signal line. No major formations have been observed on Candles.

The pattern analysis presents very interesting picture. It is quite evident and beyond doubts that the NIFTY on the Daily Chart is overbought and has approached its key pattern resistance in form of a Double Top. However, moving back to the Weekly Charts, the patterns presents a relatively bullish picture. To begin with, on the Weekly Charts as well the NIFTY has approached its major pattern resistance area of 8960-9000 zones. It has made a Double Top formation spanning over nearly eight months. However, if this pattern is viewed on a larger note, it has made a Potential Inverse Head and Shoulder formation. It is extremely important to note that this is a not-so-classice but quite Complex Inverted Head and Shoulders formation which requires validation over coming days. In the immeidate short term, we just cannot rule out Markets resisting to the 9000-mark while it consoldiates in a broad range are are likely to result into intermittant volatile profit taking bouts.

 Overall, even if the Weekly Charts show some more room to move up, the serious pattern area resistance on the Weekly Charts and the overbought nature of the Markets on the Daily Charts are all likely to prevent any runaway rise in the Markets. There is a frenzied chase by liquidity but the current structure of the markets will certainly infuse great amount of volatility in the coming week. We should be ready to brace and tackle sharp volatile movements on either side in the coming week while remaining highly stock-specific in the Markets.

A study of Relative Rotation Graphs – RRG clearly show IT Pack has been steadily losing momentum on week-on-week basis. Though it remained highly volatile on account of buy-back news and even if it remains volatile on daily basis, on a Weekly note it is likely to lose momentum. The REALTY and FMCG pack will see relative outperformance coming in with some contribution from SMALL CAP pack as well. Despite some stock-specific out performance, the METAL and ENERGY pack will continue to show weakening momentum as compared to NIFTY. Underperformance from PHARMA is likely to persist. Some attempts to consolidate and score on relative outperformance will be seen from AUTO Pack in the coming 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 



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