WEEKLY MARKET OUTLOOK FOR MARCH 13 THRU MARCH 17, 2017
As it was expected in our
previous Weekly Technical Note, the benchmark NIFTY50 continued to consolidate
and ended the Week with modest gains of 37 points or 0.42% on a Weekly note. In
the Week that has gone by, the Markets consolidated on a cautious note with
positive bias as it would face the results of the Assembly polls that also
include all important UP and Uttarakhand polls. The results are important
because a win for BJP would not only be a precursor to th 2019 elections, but
the present win could also very favorably alter the equations in the Upper
House which would subsequently make passage of some critically important bills
easy. On a lighter note, the exit polls seem to be wrong on the positive side.
It had predicted lead for BJP but BJP seems to be doing in fact much better
than expected. If there are no last minute upsets, BJP is to come out much
stronger and this is likely to be sentimental booster for the Markets. For
Monday, we expect a strong opening and also expect the Markets to begin a move
which will be a decisive move towards 9000-mark and a fresh breakout
subsequently.
For Monday, the levels of
8980 and 9115 will act as immediate resistance levels for the Markets. The
supports come in at 8865 and 8710 levels.
The Relative Strength Index –
RSI on the Weekly Chart is 64.9845 and it remains neutral showing no bullish or
bearish divergence or any failure swings. The Weekly MACD is bullish as it
continues to trade above its signal line. On the Candles, a Spinning Top has occurred and this indicated a caution and indecisiveness
on part of participants.
While having a look at
pattern analysis, it is evident that the NIFTY has been consolidating near
current levels for the third week in a row. These levels of 8930-8960 zones are
not only Triple Top pattern resistance but it is also part of a very Complex
Inverse Head & Shoulder Pattern”. Any breach above 8960 at Close levels and
beyod will see the Markets making a decisive up move towards a fresh breakout.
All and all, currently we are
likely to see a strong opening on back of BJP’s outcome in the elections. This
will be more due to its effect on the forthcoming 2019 elections and more
importantly to the improved equations in the
Rajya Sabha which will go a long way in helping clear some critically
imporant bills. Returning to a technically important point, it remains
important to note that for a fresh sustainable up move to occur, NIFTY will
have to Close above 8960 mark comprehensively and move on. We expect a upward
momentum to continue and expect a decisive move by NIFTY in the coming days.
A study of Relative Rotation Graphs – RRG clearly that while
NIFTY50 is on the verge of making a decisive move, any upside will have wider
and broad participation. In the coming week, we are expecting outperformance
from BANKNIFTY, Financial Services and Media Stocks. We also expect the select
stocks from broad Index like NIFTYFR, NIFTY MIDCAP100 & 500 and INFRA
Stocks. We expect PSU Banks to further relatively improve its performance and
it is expected that stocks like SBIN and PNB will lead this movement. Some
relative under performance is expected to come in from ENERGY and Metals and
Pharma packs. IT pack is expected to remain subdued and may get weaker 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, 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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