From a structural point of view, the index continues to consolidate below the critical resistance band, maintaining its broad uptrend. Prices hovered around the 20-week moving average (25,761) and remained well above the 50-week (24,991) and 100-week (24,394) rising averages, keeping the longer-term formation intact. However, the index is currently trapped in a broad consolidation zone, and directional conviction is absent. A decisive close above 26,250 is required to confirm a fresh trending upmove and open the way to higher levels. Until that happens, rallies are likely to remain limited, resulting in range-bound behavior. On the downside, a sustained trade below 25,000 will weaken the short-term setup and invite additional pressure.
ETMarkets.comMarkets are likely to see a gap-up opening early in the week given the US Supreme Court ruling. However, follow-through will be important. Immediate resistance levels are placed at 26,000 and 26,250, while support is seen at 25,400 and 25,00. Weekly RSI stands at 51.50, remains neutral and shows no divergence against price. The MACD remains below its signal line on the weekly timeframe, with the histogram still in negative territory, indicating that momentum is yet to turn convincingly positive. The latest candle reflects indecision near resistance, which reinforces the ongoing consolidation phase.
A pattern analysis of the weekly chart suggests that the index is trying to stabilize after pulling back from its earlier highs. The formation looks like a broad trading range with a mild upward bias, but without breakout confirmation. Price continues to respect the rising long-term moving average, which acts as dynamic support. Narrowing Bollinger Bands also reflect contracting volatility, which is often a precursor to an eventual expansionary move; However, the directional trigger is still awaited.
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Relative Rotation Graphs (RRG) shows that Nifty Financial Services, PSE, Banknifty, PSU Bank, Services Sector and Metal Index are within the leading quartile. While the services sector is losing some relative strength, these groups will collectively outperform the broader markets on a relative basis.
The Nifty IT index has moved into the weakening quadrant. Individually, it may experience a rebound given the recent selloff but relative performance may take a back seat. Infrastructure and auto indices are also within the weakening quartile.
ETMarkets.comNifty FMCG, Pharma and Realty groups are within the lagging quadrant. They may relatively underperform the broader Nifty 500 index.
Nifty media and energy indices are seen moving strongly within the improving quadrant. These groups may continue to improve their relative momentum against the broader markets.
Important Note: The RRGTM chart shows the relative strength and momentum of a group of stocks. In the above charts, they show relative performance against the NIFTY500 index (broader markets) and should not be used directly as buy or sell signals.
Milan Vaishnav, CMT, MSTA, Consulting Technical Analyst and Founder of EquityResearch.asia and ChartWizard.ae is based in Vadodara. He can be contacted at milan.vaishnav@equityresearch.asia
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