Dalal Street Week Next: Extensive attitude intact, but increasing short -term risks

In the last five sessions, the Indian equity markets were nowhere and continued to integrate into the stipulated category. In the previous weekly note, it was clearly expected that the markets remain free from any direction, unless they either violate the upper edge or the lower edge of the consolidation zone. In line with the analysis, the Nifty is oscillated in the range of 401.90-point in the last five days.

Also withdrawal of instability; On a weekly basis, India VIX reached 6.95% to 16.08. When remaining fairly range-bound, the headline index Nifty closed with a small weekly loss of 50 102.45 points (-0.41%).

As we enter the new week, the markets find themselves in the defined trading range, more toward the edge of the pattern support on the weekly chart. The Nifty continues to stay in a well -defined trading range between the 25100 and 24500 levels. This also suggests that a directional trend will emerge only if the Nifty 25100 is confirmed or ended a violation of the level of 24500. Unless any of these two things happen, the markets will be free from directional bias and will continue to remain in the defined category. The current technical composition makes it more important to protect the profits at a high level and the focus on the rotation of areas where possible leadership changes appear.

The level of 25000 and 25175 is expected to work as resistance points next week. Support comes at 24500 and 24380 levels.

Weekly RSI is at 59.02; It remains neutral and does not show any variation against the price. Weekly MACD is booming and its signal is above line.

The pattern analysis shows that after forming the most recent swing high witch at 25116, the Nifty has resisted this level for subsequent two weeks. This level of 25100-25150 creates an important barrier to the Nifty. Second, the index is closed with the support of the growing trendline; If this is violated, some more corrective retracement may be seen in the markets. Overall, there is a crucial support area for zone markets of 24500-24600.

When the Nifty lives in 25100-24500 zones and is united, it will be wise to focus on protecting profits at a higher level. When the markets keep the underlying trend intact, the level of 25100 is assured until it is likely to be some extended corrective retracement. During this phase, it is more meaningful to keep leverage exposure at normal levels and be very selective in fresh buying. When limiting purchases to the rotating areas, a precautionary point of view is recommended for the next week.

In our appearance on the Related Rotation Graph®, we compared different sectors against the CNX500 (Nifty 500 index), representing more than 95% of the free-float market cap of all listed shares.

Related Rotation Graph (RRG) shows that the Nifty PSU Bank Index is the only index within the leading quadrant, which continues to improve its related pace against widespread markets. Other fields present within the leading quadrant are PSE, infrastructure, consumption and FMCG, and these groups continue to show the relevant pace against widespread markets. The Nifty Commodities and the Nifty Bank Index has turned within a weak quadrant. Indicators in the field of financial services and services are also within a weak quadrant.

The Nifty Metal Index is turned within the legging quadrant. It is likely to be relatively underperformed along with the pharma index, which also moves within this quadrant. The IT index is also within the legging quadrant, but it has a sharp improvement in its related pace against widespread markets.

Realty, Media, Energy Raza, Midcap 100 and Auto toe Indicators are within the quadrant of correction. They are likely to continue to improve their related influence against the wider Nifty 500 index. Important Note: RRGTM charts show the relative strength and motion of a group of stocks. In the above chart, they show relevant performance against the Nifty 500 index (extensive markets) and should not be used directly as signs of purchase or selling.

Milan is the founder of Vaishnav, CMT, MSTA, Consulting Technical Analyst and EquitySarch.sia and Chartwizard.AE and located in Vadodara. It can be reached at Milan.Shishnav@equityresearch.asia