Saturday, July 22, 2017

WEEKLY MARKET OUTLOOK FOR JULY 24 THRU JULY 28, 2017

WEEKLY MARKET OUTLOOK FOR JULY 24 THRU JULY 28, 2017
After a volatile session on Friday, the benchmark NIFTY50 headed really nowhere on Weekly basis as it ended the week with just a modest gain of 28.90 points or 0.29%. The coming week will see the Markets continue to consolidate and do so in quite volatile manner. The coming Week is likely to see the Markets taking a breather and in event of any upward moves, it will remain extremely vulnerable to profit taking bouts at higher levels. Though the overall trend remains intact, there are signs galore that the Markets may take a breather.

The coming week will see the levels of 9980 and 10100 acting out as potential resistance levels in the event of the Markets attempting an up move. The supports will come in at much lower at 9830 and 9775 levels.

The Relative Strength Index – RSI on the Weekly Chart is 77.0688 and it remains grossly overbought. The NIFTY has marked a fresh 14-week high while the NIFTY has not and this has resulted into Bearish Divergence. The Daily MACD remains bullish while trading above its signal line. On the Candles, a Hanging Man formation has occurred. This candle has a long lower shadow and if it occurs during an uptrend which is the case with NIFTY, it often signals halt in the ongoing up move.

Given the overbought nature of the lead indicators and the overall structure of the Chart, there are ample signs that point towards likely stalling of the up move. The Bollinger Bands, which are 47% wider-than-normal on the Daily Chart also point towards limited gains on Weekly basis in the coming week. Given the overall structure of the Charts, read along with lead indicators and F&O data, we reiterate caution and feel that the Markets are likely to get pushed into consolidation for some more time.

A study of Relative Rotation Graphs – RRG show that METAL and IT stocks are likely to continue to show vigor and are likely to continue to relatively outperform the NIFTY. The REALTY, NIFTYJR, and other broader Indices distinctly continue to lose momentum. Though we may see MEDIA stocks attempt to consolidate their performance, pocket of outperformance will also be seen from PHARMA and FMCG stocks. We expect PSUANKS, MIDCAP and IFRA to drag.

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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