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Although the markets oscillated in a narrower vary of 789 factors (vs 1,000+ factors final week), that was nonetheless wider than typical. Nifty had a powerful upward directional bias all through the four-day quick buying and selling week. Solely short-covering fuelled this rally. The headline index ended with sturdy good points of 656 factors (+3.95%) on a weekly foundation.
The market additionally reacted positively to Federal Reserve’s rate of interest hike. The Fed was seen imminent to lift the rate of interest by 50 bps. The geopolitical tensions which continued to remain fluid had the Fed elevate the speed by 25 bps. This was broadly anticipated by the markets as properly. Thursday’s session noticed a major quantum of Put writing happening at 17,200 ranges. Whereas the best Name OI accumulation is at 17300, the second-highest Name OI accumulation is seen at 17,500 ranges. In all possibilities, the Nifty may even see a better opening on Monday, however after that, it might see some consolidation and profit-taking taking place at greater ranges.
The extent of 17,300-17,500 is a vital zone that must be watched.
Although a constructive opening to the week is anticipated, Nifty will discover possible resistance at 17,390 and 17,500 ranges. The helps are available at 17,200 and 17,010 ranges. The buying and selling vary will proceed to remain wider than typical.
The weekly RSI is 52.25 and exhibits a gentle bearish divergence towards the worth. The weekly MACD continues to stay bearish and stays under the sign line. A robust white physique emerged on the candles, reflecting a powerful upward directional bias that persevered by means of the week.
ET CONTRIBUTORSThe sample evaluation of the weekly chart exhibits that Nifty had halted its technical pullback at 50-Week MA which presently stands at 16,654. The index has not solely managed to penetrate the 50-Week MA, nevertheless it has additionally moved above the upward rising pattern line which was earlier a help and was violated by Nifty. Proper now, the index has once more halted close to 20-Week MA which is at 17,331.
Over the previous two weeks, Nifty has pulled again practically 1,616-odd factors from the low of the earlier week. It mustn’t come as a shock if Nifty consolidates after an anticipated constructive opening on Monday. It’s strongly recommended that any further, upside strikes shouldn’t be chased, as a substitute, they need to be used to take some cash off the desk and shield earnings. There are additionally sturdy potentialities that the historically defensive pockets like FMCG, consumption, pharma, and IT do higher.
General, whereas staying extremely cautious at greater ranges, earnings must be vigilantly protected whereas holding leveraged exposures at modest ranges.
In our have a look at Relative Rotation Graphs®, we in contrast numerous sectors towards CNX500 (NIFTY 500 Index), which represents over 95% of the free float market cap of all of the shares listed.
ET CONTRIBUTORSET CONTRIBUTORSThe evaluation of Relative Rotation Graphs (RRG) exhibits that Nifty Financial institution, PSE, PSU Financial institution and Metallic are positioned contained in the main quadrant. Barring metals, the opposite three indices are seen consolidating and barely paring on their relative momentum. The Nifty Auto Index can also be contained in the main quadrant, nonetheless, it seems to be very sharply giving up on its relative momentum and transferring in direction of the weakening quadrant.
Nifty Commodities and Power are firmly positioned contained in the main quadrant, and these teams will proceed to comparatively outperform the broader markets.
Nifty Media and IT are contained in the weakening quadrant. They seem like enhancing on their relative momentum and making an attempt to consolidate their place. Nifty Realty index is positioned within the lagging quadrant and it seems to be enhancing on its relative momentum.
The Midcap 100 and Consumption proceed to languish contained in the weakening quadrant, nonetheless, the latter is seen enhancing on its relative momentum.
FMCG and the Monetary Providers indices are contained in the enhancing quadrant and are anticipated to proceed placing up a resilient present within the coming week.
Essential Observe: RRGTM charts present the relative power and momentum for a bunch of shares. Within the above Chart, they present relative efficiency towards NIFTY500 Index (Broader Markets) and shouldn’t be used straight as purchase or promote alerts.
Milan Vaishnav, CMT, MSTA, is a Consulting Technical Analyst and founding father of EquityResearch.asia and ChartWizard.ae and relies at Vadodara. He could be reached at
milan.vaishnav@equityresearch.asia
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