Although the markets oscillated in a narrower vary of 789 factors (vs 1,000+ factors final week), that was nonetheless wider than ordinary. Nifty had a powerful upward directional bias all through the four-day brief buying and selling week. Solely short-covering fuelled this rally. The headline index ended with sturdy features 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 boost the rate of interest by 50 bps. The geopolitical tensions which continued to remain fluid had the Fed increase the speed by 25 bps. This was broadly anticipated by the markets as nicely. Thursday’s session noticed a major quantum of Put writing going down at 17,200 ranges. Whereas the very best Name OI accumulation is at 17300, the second-highest Name OI accumulation is seen at 17,500 ranges. In all chances, the Nifty may even see a better opening on Monday, however after that, it might see some consolidation and profit-taking occurring 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 in at 17,200 and 17,010 ranges. The buying and selling vary will proceed to remain wider than ordinary.
The weekly RSI is 52.25 and exhibits a light bearish divergence towards the value. The weekly MACD continues to stay bearish and stays beneath the sign line. A powerful white physique emerged on the candles, reflecting a powerful upward directional bias that continued by means of the week.
The 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 development 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 shouldn’t come as a shock if Nifty consolidates after an anticipated constructive opening on Monday. It’s strongly prompt that to any extent further, upside strikes shouldn’t be chased, as an alternative, they need to be used to take some cash off the desk and defend 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 needs to be vigilantly protected whereas protecting leveraged exposures at modest ranges.
In our take 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.
The evaluation of Relative Rotation Graphs (RRG) exhibits that Nifty Financial institution, PSE, PSU Financial institution and Steel 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, nevertheless, it seems to be very sharply giving up on its relative momentum and shifting 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 look like bettering 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 bettering on its relative momentum.
The Midcap 100 and Consumption proceed to languish contained in the weakening quadrant, nevertheless, the latter is seen bettering on its relative momentum.
FMCG and the Monetary Providers indices are contained in the bettering quadrant and are anticipated to proceed placing up a resilient present within the coming week.
Essential Notice: 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 instantly as purchase or promote indicators.
Milan Vaishnav, CMT, MSTA, is a Consulting Technical Analyst and founding father of EquityResearch.asia and ChartWizard.ae and relies at Vadodara. He might be reached at