WEEKLY MARKET OUTLOOK FOR NOV 20 THRU NOV 24, 2017
In the week that has gone by, the benchmark NIFTY50 has
ended with net loss of 38.15 points or 0.37% on weekly basis. In our previous
weekly note, we had expected consolidation and a worst case support in the
10180-10200 zones. However, the NIFTY went slightly below this forming the low
at 10094. In the coming week, this Week’s high of 10343 will pose serious
resistance followed by the 10490 mark. On the Weekly Charts, there is Classical
Bearish Divergence on the RSI. There is ample evidence present on the weekly
Charts that despite defined up moves, we may not see the Markets scaling fresh highs so fast and
easily once gain.
The levels of 10345 and 10490 will act as major resistance
levels for the coming week. Supports come in at 10100 and 9930 zones.
The Relative Strength Index – RSI on the Weekly Chart is
63.8336 at it remains neutral against the price. The Weekly MACD is still
bullish and trades above its signal line but is rapidly narrowing its
trajectory. On the Candles, a classical Hanging Man emerged. When this happens
after a serious up move, it often signals a top or a minor reversal.
If we do a detailed pattern analysis, since 10,100 levels
until the NIFTY marked its high at 10490, the Weekly RSI has consistently
marked a lower top and has persistently shown a Negative Divergence. Also, this
is coupled with a Classical topping formation on the Weekly Candles as well.
All this points towards the fact that the run-up for the Markets to 10490 and
beyond will not be easy. We may once again see the Markets forced into some
consolidation and corrective pressure at higher levels. At the same time, we
also do not see the signs of the primary bull trend being fractured. We advice
to continue making stock specific purchases with declines and as effectively rotating
sectors will be important. Caution is advised as until 10490 is breached on the
upside, it has become a intermediate top for the Markets.
A study of Relative Rotation Graphs – RRG show that the
METAL, ENERGY and along with Services Sector is continuing to lose Momentum and
may show some weakness in relative performance. However, METAL may see very
select out-performance but the Index per-se may continue to lose momentum. We
can see relative out-performance coming from IT, MEDIA, PHARMA and Public Sector
Enterprises. The FMCG may continue to attempt to consolidate its performance
vis-à-vis general Markets.
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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