WEEKLY MARKET OUTLOOK FOR OCT 09 THRU OCT 13, 2017
The week that went by certainly saw volatility remaining
ingrained in the Markets much on expected lines but overall it remained much
better than expected. In the short week, the benchmark ended the Week with net
gains of 191.10 points or 1.95% on weekly basis. The Weekly Charts have
validated the broad trading pattern that has appeared on the Daily Charts. Just
like Daily Charts, a rectangular pattern is emerging on the Weekly Charts as
well. This gives credibility to both the patters as the patterns are fractal in
nature. In the coming week, we will see the Markets remaining volatile and
range bound but trading with upward bias. Though no major downsides are likely,
the top of 10179 too is not likely to be taken out too soon too fast.
Next Week will see the levels of 10050 and 10175 playing out
as resistance area. Supports will remain at 9910 and 9830 zones.
The Relative Strength Index – RSI on the Weekly Chart is
61.2419 and it remains neutral showing no divergence against the price. The
Weekly MACD is bearish as it trades below its signal line. No major formations
were observed on Candles.
The pattern analysis indicates that the NIFTY continues to
remain comfortably in the 18-month old upward rising channel. However, it also
appears that the NIFTY is likely to form a rectangular trading range just like
it did on the Daily Charts.
All and all, given the lead indicators and overall sectoral
study, we are unlikely to see any major downsides in the Markets in the coming
week. However, in the same breath, runaway rise beyond the previous highs of
the Markets is unlikely as well. We expected to see range bound movement with
some volatility ingrained in the Markets in the coming week. With signs of any
reversal as yet, shorts should be avoided and dips should be utilized to making
fresh select purchases.
A study of Relative Rotation Graphs – RRG show that in the
coming week, METAL stocks will continue to relatively outperform. Along with
this, we will also see good performance coming in from IT and PHARMA stocks.
MEDIA too has shown improvement and we will see select gains in this sector as
well. We are likely to see select and highly stock specific outperformance in
broader Indices like CNX100 and CNX200. No major show is expected from FMCG,
REALTY and PSUBANKS. NIFTY Junior (Nifty Next 50) is likely to lose momentum
this week.
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@equityresearch.asia
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)
+91-70164-32277 / +91-98250-16331
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