Nifty outlook: Dalal Street Week Ahead: Nifty trades below key moving averages; all up moves may get sold into

In per week that remained largely bearish, the Indian fairness markets retraced and ended on a unfavourable be aware.

Not like the earlier week, this time Nifty didn’t oscillate in both route. As an alternative, it simply remained unilaterally bearish for the main a part of the week. The index ended up violating necessary help, and this has taken it again inside the massive buying and selling vary with the broader technicals remaining weak.

Whereas not displaying any main energy on the bigger timeframe charts, the headline index closed with a internet lack of 382.50 factors or 2.31% on a weekly foundation.

From a technical standpoint, Friday’s session inflicted some injury on the technical construction of the Nifty. On the every day timeframe, the index has once more slipped beneath the short-term 20-DMA which presently stands at 16,315. Other than this, the Nifty additionally trades beneath all three key shifting averages on the every day timeframe charts.

Coming to the weekly technical construction, Nifty has failed to maneuver previous the 20-week MA which presently stands at 16,902. With the 50-week MA at 17,063, the zone of 16,900-17,065 turns into a really stiff resistance space for the index. Essentially the most speedy resistance level for Nifty stays at 16,400 because the index has slipped beneath this degree.

For the approaching week, the markets could discover resistance at 16,400 and 16,665 ranges. On the decrease aspect, helps exist at 16,000 and 15,840 ranges.

The weekly RSI is 42.85. It stays impartial and doesn’t present any divergence in opposition to the worth. The weekly MACD is bearish and stays beneath the sign line.

On charts, a black-bodied candle has appeared. This confirmed a bearish directional consensus of the market individuals. Other than this, no different formations have been seen.

The sample evaluation on the weekly charts exhibits that 50-week MA and 20-week MA are in shut proximity to one another at 17,063 and 16,902. This makes the zone of 16,900-17,065 a robust resistance space for the index.

Apart from this, the newest transfer has dragged Nifty again contained in the 1,000-point buying and selling vary which has 15,700 as its sample help space. Which means so long as Nifty stays between 15,700-17,000, it won’t have any particular directional bias and we’ll see the markets oscillate forwards and backwards on this large buying and selling vary.

The derivatives information exhibits that lengthy unwinding has occurred within the markets. Nifty present month futures have shed over 2.59 lakh shares or 2.22% in internet Open Curiosity. The decline in OI has include the decline in Nifty, and this hints at lengthy unwinding at greater ranges.

Importantly, this may increasingly not result in any speedy fall within the markets, however there are prospects that every one up strikes could get bought into. It’s strongly advisable to maintain leveraged exposures curtailed. It might be rewarding to remain uncovered to pockets displaying sturdy or enhancing relative energy.

Within the coming week, sectors like FMCG, consumption, and choose financials could put up good efficiency.

In our have a look at Relative Rotation Graphs®, we in contrast varied sectors in opposition to CNX500 (Nifty 500 Index), which represents over 95% of the free float market cap of all of the shares listed.

The evaluation of Relative Rotation Graphs (RRG) exhibits some combined setup. Whereas few of the defensive pockets are displaying enchancment within the relative energy and momentum, just a few different excessive beta teams are additionally displaying prospects of resilient efficiency from them.

Steel and commodity indices are contained in the weakening , whereas the media index is seen languishing contained in the lagging quadrant. These teams are prone to put up relative underperformance in opposition to the broader markets. Nifty Pharma index has additionally rolled contained in the weakening quadrant.

Nifty FMCG, Consumption, Auto, Infrastructure, PSE, and Vitality teams are contained in the main quadrant. They’re anticipated to place up relative outperformance in opposition to the broader Nifty500 index.

Nifty Companies sector, Realty and IT indices are additionally seen languishing contained in the lagging quadrant. Some remoted stock-specific efficiency could also be seen however total relative underperformance could proceed to persist.

Whereas Nifty Monetary Companies index stays within the enhancing quadrant, Financial institution Nifty has rolled contained in the main quadrant.

Necessary Observe: RRGTM charts present the relative energy and momentum for a gaggle of shares. Within the above Chart, they present relative efficiency in opposition to Nifty500 Index (Broader Markets) and shouldn’t be used immediately as purchase or promote alerts. (Nifty 500 Index), which represents over 95% of the free float market cap of all of the shares listed.


Milan Vaishnav, CMT, MSTA, is a Consulting Technical Analyst and founding father of EquityResearch.asia and ChartWizard.ae and relies at Vadodara. He will be reached at [email protected]