WEEKLY MARKET OUTLOOK FOR DEC 18 THRU DEC 22, 2017
In our previous Weekly Outlook, we had expressed
possibilities of Indian Equity Markets being pushed into some consolidation
post finding resistance at higher levels. The Week that has gone by remained
quite volatile on after volatile movements on either side, the benchmark
NIFTY50 finally ended the Week with a net gain of 67.60 points or 0.66%. This
Week’s close was aided with a sharp short covering aided by the outcome of exit
polls that showed BJP retaining power in Gujarat.
Going into trade on Monday, we are likely to being a
positive but volatile start to the week. In all likelihood, we might see some
positive opening. Just as the Gujarat Election results / trend start trickling
in on Monday, we will see the Markets reacting in a volatile manner. However,
if nothing unexpected comes out of it, we will see the Markets inching higher
towards its previous high. However, in the same breath, we do not see it
posting meaningfully fresh highs in any case.
The levels of 10410 and 10490 will play out as immediate
resistance levels. The levels of 10150 and 10090 will act as immediate
supports.
The Relative Strength Index – RSI on the Weekly Charts is
61.2382 and it remains neutral showing no divergence to the price. The Weekly
MACD stays bearish while trading below its signal line. A candle with a long
lower shadow occurred on the Weekly Charts. This may mean bullish reversal but
it requires confirmation on the next candle.
All and all, we might see some positive start but also
expect volatility to remain ingrained in the system. Having said this, if we
look at the pattern analysis, we still expect the levels of 10490 resist at
higher levels. Also, the lead indicators like RSI remain in a lower top
formation and are yet to break out from a range. We expect the short covering
that took place in the week that has gone by to be effectively replaced with
fresh buying. Until this happens, while selective sector specific purchases may
be made, bulk of the up moves should be utilized to book and protect profits.
A study of Relative Rotation Graphs – RRG show that along
with the broader Markets, the PSUBANK, MEDIA and INFRA stocks will continue to
relatively outperform the NIFTY accompanied by the MIDCAPS. We will see METALS
continue to lose overall momentum along with PHARMA. Also joining the likely
relative outperformers will be the FMCG and NIFTY Junior Pack. Along with
PHARMA, not meaningful up move is likely in AUTO and Financial Services pack on
weekly bias. IT is expected to consolidate with a positive bias.
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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