WEEKLY MARKET OUTLOOK FOR FEBRUARY 27 THRU MARCH 03, 2017
The Markets on Thursday saw
sharp volatility especially in the second half of the session which was much
because of the expiry led rollovers. With the short week that came to an end on
Thursday, the NIFTY posted decent gains of 117.80 points or 1.34% on Weekly
basis. This Week also remained highly eventful as the NIFTY posted fresh
52-week highs while it also approached key resistance area. On the top of it it
formed some interesting patterns as
well. In the Week that went by, NIFTY continued to advance to its logical
expected targets of 9000-mark as it posted its Weekly high of 8982.15. In this
short week, the Markets has ensured that we see the coming next week remaining
as eventful and volatile as the previous
week. On Monday, we see a tepid start to the Markets and some modestly negative
opening will be expected. The 8968-9000 zones will remain key resistance area
for the immediate short term. We can see some corrective activities persisting
and this will also lead to some existance of sharp volatility in the Markets.
For the coming week, the
levels of 8990 aand 9195 will be the broad resistance area for the Markets. The supports will be seen
coming around 8845 and 8750 levels.
The Relative Strength Index –
RSI on the Weekly Chart is 65.8732 and it has reached its highest value in last
14-periods which is Bullish. It does not show any bullish or bearish divergence
as against the price. The Weekly MACD remains bullish as it trades above its
signal line. No major formations have been observed on Candles.
The pattern analysis presents
very interesting picture. It is quite evident and beyond doubts that the NIFTY
on the Daily Chart is overbought and has approached its key pattern resistance
in form of a Double Top. However, moving back to the Weekly Charts, the
patterns presents a relatively bullish picture. To begin with, on the Weekly
Charts as well the NIFTY has approached its major pattern resistance area of
8960-9000 zones. It has made a Double Top formation spanning over nearly eight
months. However, if this pattern is viewed on a larger note, it has made a
Potential Inverse Head and Shoulder formation. It is extremely important to
note that this is a not-so-classice but quite Complex Inverted Head and
Shoulders formation which requires validation over coming days. In the
immeidate short term, we just cannot rule out Markets resisting to the
9000-mark while it consoldiates in a broad range are are likely to result into
intermittant volatile profit taking bouts.
Overall, even if the Weekly Charts show some
more room to move up, the serious pattern area resistance on the Weekly Charts
and the overbought nature of the Markets on the Daily Charts are all likely to prevent
any runaway rise in the Markets. There is a frenzied chase by liquidity but the
current structure of the markets will certainly infuse great amount of
volatility in the coming week. We should be ready to brace and tackle sharp
volatile movements on either side in the coming week while remaining highly
stock-specific in the Markets.
A study of Relative Rotation Graphs – RRG clearly show IT
Pack has been steadily losing momentum on week-on-week basis. Though it
remained highly volatile on account of buy-back news and even if it remains
volatile on daily basis, on a Weekly note it is likely to lose momentum. The
REALTY and FMCG pack will see relative outperformance coming in with some
contribution from SMALL CAP pack as well. Despite some stock-specific out
performance, the METAL and ENERGY pack will continue to show weakening momentum
as compared to NIFTY. Underperformance from PHARMA is likely to persist. Some
attempts to consolidate and score on relative outperformance will be seen from
AUTO Pack in the coming 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, is
Consultant Technical Analyst at Gemstone Equity Research & Advisory Services,
Vadodara. He can be reached at milan.vaishnav@equityresearch.asia)
Milan Vaishnav, CMT
Technical Analyst
(Research Analyst, SEBI Reg.
No. INH000003341)
Member:
Market Technicians Association, (MTA), USA
Canadian Society of Technical Analysts, (CSTA), CANADA
+91-98250-16331
