WEEKLY MARKET OUTLOOK FOR OCT 02 THRU OCT 06, 2017
In our previous Weekly note, we had mentioned about the
possibility of the NIFTY marking the levels of 10178.95 as its temporary top.
We had also expected the benchmark to maintain a corrective bias not it not
making any meaningful headway. On the Weekly basis, the NIFTY50 has ended the
week with net loss of 175.80 points or 1.76%. We have a shortened trading week
coming up with Monday being a trading holiday. In the coming Week, we see the
benchmark trading in a defined range not making much headway on the upside. The
coming week might also remain volatile and the levels of 9685 will be
critically watched.
The next week will see the levels of 9900 and 9990 playing
out as resistance levels. Supports come in at 9685 and 9610 zones. The coming
week with see a ranged oscillations within this defined range, while still
keeping the current primary trend intact.
The Relative Strength Index – RSI on the Weekly Chart is
55.9844 and it has reached its lowest value in last 14-periods which is
bearish. The Weekly RSI has set a fresh 14-period low while the NIFTY has not
and this is Bearish Divergence. Weekly MACD continues to below its signal line.
The pattern analysis show that the NIFTY continues to trade
in the 18-month upward rising channel that it has formed. Speaking on the
broader lines, it has tested its 20-period moving average and breaching this
level on the downside might bring in some weakness. Weekly VIX still remain
relatively calm at lower levels which remain a cause of concern.
Overall, the overall texture of the Markets suggests that it
is likely to continue to trade in a broad defined range. Though we maintain
that so long as the NIFTY maintains the 9685 levels, no major downsides are
expected. The upside, the range will remain capped as well. Overall, with near certainty
that major and meaningful up move is expected, we continue to recommend adopting
a stock specific approach in the Markets. With no structural breach on the charts,
select downsides may be utilized to make modest purchases. It is recommended to
keep overall exposures modest.
A study of Relative Rotation Graphs – RRG show that in the
coming week, IT stocks are expected to relatively outperform the Markets. They
are likely to be joined by select pockets of NIFTY Junior (NIFTY Next 50) and
MIDCAPS. CNX Services stocks are also likely to relatively outperform.
SmallCaps and INFRA stocks are likely to remain laggards. METAL Stocks are
likely to maintain its range bound movement and its momentum. Auto, Realty and
BANKNIFTY and FMCG is expected to relatively underperform but will attempt to
consolidate its performance.
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
