WEEKLY MARKET OUTLOOK FOR JUNE 19 THRU JUN 23, 2017
Our previous Weekly note mentioned about requirement of
approaching Markets with great caution. We had also expected some minor
corrective action to set in as well. In line with this analysis, with very
limited downsides, the benchmark NIFTY50 witnessed some corrective action and
ended the Week with net loss of 80.20 points or 0.83% on the Weekly note. The
coming week also is likely to see the benchmark struggling to go beyond
9600-mark. The zones of 9575-9625 will remain critical to watch for in the
coming week.
While the levels of 9625 and 9710 will act as immediate
resistance levels for the Markets, the levels of 9575 and 9460 will work out as
supports.
The Relative Strength Index – RSI on the Weekly Charts is
72.1133. Though it is neutral showing no divergences against the price, it
continues to trade in overbought territory. The Weekly MACD is bullish as it
continues to trade above its signal line. No significant formations are
observed on Candles.
The pattern analysis clearly portrays the breakout that
occurred above the 8900-8950 levels remaining in force. Only that it is now
little overstretched with lead indicators in overbought territory that it
becomes a little cause of concern.
At this juncture, we wish to reiterate that with the
undercurrent remaining intact, we still need to approach the Markets with good
amount of caution. Unless the NIFTY moves past 9625 and beyond and stays above
that, it will continue to remain vulnerable minor profit taking activity. Some
stock specific out-performance will continue but over the likelihood of the
Markets remaining in corrective mode while keeping its trend intact cannot be
ruled out.
A study of Relative Rotation Graphs – RRG show that the
coming week is likely to see the ENERGY, INFRA, CNXMID, and NIFTY Junior
continuing to lag on week-on-week basis. We will continue to see sustained
outperformance in relative terms in FMCG, Financial Services and Bank Nifty
stocks. AUTO is likely to further strengthen its outperformance. CNXIT and
PHARMA are expected to consolidate its performance.
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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