Nifty moved in a narrow range of 279 odd points throughout the week before ending with gain. Volatility is also reduced. The headline index ended the week with a net profit of 239.05 points, or 1.60%.
In world affairs, little significant technological development is underway. The US dollar index (DXY) is rolling over within the improving quadrant, indicating that the decline in performance relative to other asset classes is likely to end. US Treasury bonds also show a consistent improvement in relative momentum relative to other asset classes.
On the domestic side, Nifty remains very overstretched on the chart, well above the curve, showing a large deviation from the average. In other words, even if there is no big drop in stocks market This will move you to fix integration.
Strengthening the US dollar index is not a plus for emerging markets market.. Over the next few days, Nifty’s 15,250 and 15,365 levels will act as immediate resistance points, with support much lower at the 15,000 and 14,890 levels. If you take corrective action, the scope of transactions will be wider than usual.
The weekly RSI was 74.39. Not only is it in the overbought zone, but it also shows a negative divergence against the price. Nifty ended at a new 14-period high, but the RSI did not. Weekly MACD is bullish and trades on the signal line. No significant formation was observed in the candle, except for the small white body that developed.
Pattern analysis of the chart showed that Nifty again went far beyond that curve. After a week of corrective action, it accumulated over 2,000 points. The closest 20-week moving average is 13,232, almost 2,000 points below this level. The index tracks the significantly expanded Upper Bollinger Bands. These bands usually tend to make adjustments, again keeping prices within a well-defined range.
Another important thing to keep in mind is that the breadth of the market has not been identified. This range does not confirm the new high, which remains a concern. Overall, it’s a good idea to use all the bounces to make a profit and remove some money from the table, rather than chasing momentum through new purchases.
If you have a new purchase, you should store it in traditional defense stocks such as pharmaceuticals, IT, FMCG, and consumer goods. The relative strength of these stocks is gradually increasing for a wider market.
Looking at the Relative Rotation Graph ®, we compared various sectoral indexes with the CNX500 (Nifty500 Index). CNX500 accounts for more than 95% of the market capitalization of all listed stocks.
RRG reviews are not a strong picture. Only the Nifty PSU Bank Index is comfortably located within the main quadrant. This means that this index may outperform the broader Nifty500 index in the future.
Apart from this group, Nifty Realty is the only other sectoral index in the major quadrants. However, this group seems to be losing relative momentum. Nifty Metal and Bank indexes are floating in a weakening quadrant. The Nifty Services sector and the Nifty Midcap 100 index are also there. These groups are spinning southwest and may continue to underperform the broader market slightly.
The exception is the NiftyITIndex. It’s inside the weakening quadrant, but its relative momentum has improved significantly. It is moving vertically towards an improving quadrant. If this rate of change is maintained, it may cause some IT stocks to show resilient performance in the coming weeks.
The Nifty Energy Index has spun back within the lagging quadrant. The Nifty Commodities Index, along with Nifty Pharma, is also inside the lagging quadrant and may show selective and isolated outperformance, while other groups are suffering from the lagging quadrant.
The Nifty Infrastructure Index is within the quadrant of improvement and seems to be steadily maintaining its turnover and relative momentum. The nifty PSE and media index show a strong negative turn while in the improvement quadrant. Fast-moving consumer goods and the CPI also show some fatigue while in the quadrant of improvement.
However, these groups may post orphaned outperformances due to the defensive nature of this segment.
Important Note: The RRGTM chart shows the relative strength and momentum of the stock group. The chart above shows the performance relative to the Nifty500 index (wider market) and should not be used directly as a buy / sell signal.
(Milan Vaishnav, CMT, MSTA are consultant technical analysts and founders of Gemstone Equity Research & Advisory Services in Vadodara.
Nifty: One week ahead of Daral Street: Continue to defend.Bank stocks may continue to outperform
https://economictimes.indiatimes.com/markets/stocks/news/dalal-street-week-ahead-stay-defensive-bank-stocks-may-continue-to-outperform/articleshow/80893911.cms Nifty: One week ahead of Daral Street: Continue to defend.Bank stocks may continue to outperform