Saturday, September 23, 2017

WEEKLY MARKET OUTLOOK FOR SEP 25 THRU SEP 29, 2017

WEEKLY MARKET OUTLOOK FOR SEP 25 THRU SEP 29, 2017
All throughout previous Week, we kept on sounding alert signs on the possibility of the NIFTY seeing sharp corrective movements and chances of not sustaining the fresh highs that the benchmark NIFTY50 was trying to mark. Very much in line with this analysis, not only did the Index retraced from its high levels but also ended the week on a negative note losing 121 points or 1.20% on a Weekly basis. In all probability, Markets have marked the levels of 10180 as its temporary top and it will take a while before the Markets take out those levels on the upside. However, the primary uptrend remains intact.

The coming week will see the levels of 10150 and 10235 playing out as immediate resistance levels for the Markets. Supports come in at 9890 and 9810 zones.

The Relative Strength Index – RSI on the Weekly Chart is 63.3218 and it remains neutral showing no divergence against the price. The Weekly MACD is bearish as it currently trades below its signal line. On the Candles, an Engulfing Bearish Pattern has occurred. This is very much likely to have bearish implications as it has occurred during an uptrend. It has a potential to temporarily halt the up move.

The pattern analysis show that the NIFTY continues to trade well within the upward rising channel formed over last 18-months. However, it has some room for retracement and even with coming off from current levels; there won’t be any technical breach on the Charts.

It is important to note that though we may cite any reason for the previous week’s decline, this retracement and halting of up move was very much because of technical nature. The NIFTY PCR (Put to Call Ratio) was at recent highs and the VIX traded at all time low. Technical correction was imminent. We expect a subdued start to the expiry week on Monday and continue to maintain cautious and stock specific approach to the Markets as we see that even with the primary trend remaining intact, some corrective activities may continue.

A study of Relative Rotation Graphs – RRG show that in the coming week, we expect that IT Stocks are likely to take lead and relatively out-perform the broader Markets. Metals are showing signs of tiredness and are expected to show some slowdown and consolidate. REALTY and FMCG stocks are not expected to put up and good show as well. We will see PHARMA consolidating and select out-performance coming in from MEDIA, PSUBANKS , NIFTY Junior and Infra stocks.

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, MSTA is Consultant Technical Analyst at Gemstone Equity Research & Advisory Services, Vadodara. He can be reached at 

Milan Vaishnav, CMT, MSTA
Technical Analyst
(Research Analyst, SEBI Reg. No. INH000003341)
Member
CMT Association (Formerly Market Technicians Association, (MTA), USA
Canadian Society of Technical Analysts, (CSTA), CANADA
Society of Technical Analysts, STA (UK)


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