WEEKLY MARKET OUTLOOK FOR MAY 22 THRU MAY 26, 2017
The Indian Equities consolidated on Friday with nominal
gains of 1.55 points. In our previous Weekly note, we had mentioned that we do
not expect any significant weekly gains given the overbought nature of the
Markets. In line with this, the benchmark NIFTY50 ended the week with minor
gains of 27 points of 0.29% on weekly basis. In the coming week, we do not
expect any runaway rise in the Markets. The overbought indicators and the
expiry week will dominate the directional bias that the Markets will take. We
expect minor corrective actions with limited downsides and consolidation to
continue through the coming week.
The levels of 9490 and 9550 are expected to pose stiff resistance. The supports are expected to come in at 9350 and 9280 zones.
The Relative Strength Index – RSI on the Weekly Chart is
72.3968. It is bullish as it has made a fresh 14-period high but it trades in
overbought territory. The Weekly MACD is bullish but it appears to be losing momentum
to some extent. On the Candles, a long upper shadow occurred. This has bearish
implications and it is significant as such formation has occurred near high
levels. It has potential to continue to temporarily halt the up move.
The pattern analysis depicts a buoyant but a tired picture.
The Markets broke out on the upside from the triple top formation and has been
inching upwards since then. However, at present, the lead indicators are
oversold and some signs of minor fatigue are evident.
All and all, though the Markets have kept its primary trend
intact on the upside, there are chances that we see minor corrective actions
and consolidation continuing through the coming week. The rollovers will
dominate the coming week while some outperforming sectors will take some
breather, we can expect good performance in select stocks from AUTO, Banks and
Pharma.
A study of Relative Rotation Graphs – RRG show that in the
coming week, AUTO and PSUBANKS will continue to improve their relative
outperformance with NIFTY. ENERGY and SERVICE stocks will further slowdown in
their momentum. CNXIT and PHARMA may relatively under performing in coming
week. METALS will look to consolidate its performance and we will also see
select out-performance from the NIFTY NEXT50 pack.
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
+91-98250-16331
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