Never miss a great news story!
Get instant notifications from Economic Times
AllowNot now


You can switch off notifications anytime using browser settings.
10,817.60-185.9
Stock Analysis, IPO, Mutual Funds, Bonds & More

D-Street week ahead: Nifty bounce at this stage will at best be half-hearted

Apart from formation of a black body, no significant formations appear on the candles.

, ET CONTRIBUTORS|
Aug 24, 2019, 05.11 PM IST
0Comments
shutterstock_1021965007
Dalal Street remained much on the anticipated lines during the week gone by. The broader structure of the market continued to remain weak; it faced severe volatility during the past few sessions and faced heavy selling pressure at higher levels. After a thoroughly volatile week, the headline index ended with a net loss of 218 points (-1.98%).

The rounding top that appeared on the daily charts exists on the weekly charts as well, while making the pattern fractal in nature. Nifty has shown a minor breach of the neckline of this formation and ended a notch below its 100-week moving average, which is currently at 10,878. Nifty’s base and the range have shifted lower, and all technical bounces will find resistance in the 11,000-11,060 range.

The coming week may open amid the feel-good factor created by Friday’s post-market booster package from the Finance Minister and extreme negativity in global markets sparked by a deterioration in the China-US trade war. The market may make see some half-hearted bounce and attempt to stabilise and defend its most recent bottom. But the same may not sustain. The broader market setup remains structurally bearish. The Volatility Index, India VIX rose to 17.35 after climbing 4.20% over the week.

The Relative Strength Index (RSI) on the weekly chart stood at 36.47; it has made a fresh 14-period low, and this is bearish signal. The RSI does not show any divergence from price. The weekly MACD continues to stay bearish while trading below its signal line.

market outlook


Apart from formation of a black body, no significant formations appear on the candles.

Bollinger bands are widening on the weekly charts. This, following the down move, signifies the intensity of the bearish sentiment that the market is currently dealing with.

Also, it is important to note that Nifty has ended below its lower Bollinger band. Though a temporary pullback inside the band is not ruled out, it has raised the possibility of a downward breakout in the coming days.

With the upper base of the market shifting significantly lower, the upward moves will find themselves restricted up to 11,000 level. In event of Nifty seeing any bounce, technical of otherwise, it will encounter stiff resistance near the 11,000-mark.

All such pullbacks, when they occur, should be utilised to protect profits on long positions. Overall, exposures on either side should be kept modest and a cautious view is advised for the coming week.

In our look at Relative Rotation Graphs, we compared various sectors against CNX500 (Nifty500 Index), which represents over 95% of the free-float market cap of all the stocks listed.

The review of Relative Rotation Graphs (RRG) shows just a handful of sectors are expected to remain resilient and relatively outperform the broader market. We will see strong relative outperformance from FMCG and Consumption indices, which are in the improving quadrant and are seen heading higher with sustained improvement in the relative momentum.

Along with this, we can also see relative outperformance from the IT Index, which has moved into the leading quadrant. Some isolated stock-specific moves can also be expected from the Pharma group.

Few key sectors like Services, Financial Services, PSU Banks, Realty, BankNifty, Metal, and Infrastructure are steadily losing relative momentum while Energy and Media groups are likely to attempt to consolidate and remain within a defined range.

Important Note:
Institutional Research. Individual Advice.
NIFTY500 Index (Broader Markets)
RRGTM charts show you the relative strength and momentum for a group of stocks. In the above Chart, they show relative performance against

(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)
Comments
Add Your Comments
Commenting feature is disabled in your country/region.
Download The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.

Other useful Links


Follow us on


Download et app


Copyright © 2019 Bennett, Coleman & Co. Ltd. All rights reserved. For reprint rights: Times Syndication Service