D-Street outlook: Dalal Street Week Ahead: Which sectors may lead market action, and which ones may lag

As mentioned in our earlier technical be aware, the Indian fairness market has develop into grossly overbought, which is why it’s largely anticipated to consolidate. Nevertheless, within the first 4 days of the week passed by, Nifty put up a really sturdy present, because it stored on marking incremental lifetime highs on a closing foundation.

The final buying and selling session additionally had a buoyant first half; however the second half noticed some severe paring of positive factors. Nifty traded in a a lot wider 523-point vary. Regardless of coming off its excessive, it nonetheless managed to finish with a web achieve of 215 factors, or 1.24 per cent, on a weekly foundation.

Identical to the week earlier than this one, Nifty continues to stay within the overbought zone. The first uptrend and the breakout that occurred above the 15,900-15,950 ranges stay very a lot intact. The one risk is that Nifty has marked an intermediate high by taking a breather; and the 17,792 degree has now develop into an important level of resistance. Friday’s motion created a large buying and selling vary for Nifty between 17,400 on the decrease facet and 17,790 on the upper facet.

There are possibilities that the market could keep on this broad consolidation vary for a while. Nifty PCR throughout all expiries stays wholesome, and should not overbought. The approaching week might even see the 17,680 and 17,790 ranges put up sturdy resistance, whereas help could are available at 17,480 and 17,355 ranges. The buying and selling vary is prone to keep wider than normal within the coming days.

Volatility has elevated; India VIX surged 9.25% to fifteen.2300.

The weekly RSI stood at 79.21; it continues to stay within the overbought territory. Nevertheless, the RSI is impartial, and doesn’t present any divergence towards the worth. The each day MACD seemed bullish and stayed above the Sign Line. A white physique emerged on the candles. Aside from this, no different formations had been observed on the charts.

Sample evaluation confirmed the breakout that occurred after Nifty crossed above the 15,900-15,950 vary could be very a lot intact. Whereas persevering with to be in a steep uptrend, Nifty has simply ended close to the higher Bollinger band.

Within the coming week, the Index could proceed to trace the higher band. It additionally seems to have created a broad consolidation vary, with the 17,350-17,400 zone performing as a decrease help. Within the coming days, it’s anticipated that Financial institution Nifty, which was lagging in its relative efficiency towards Nifty, will proceed to stay resilient and comparatively outperform the broader market.

Aside from this, different consolidating sectors like PSE, Auto, and Realty Indices might also present resilient efficiency. Aggressive positions needs to be averted at this stage and new purchases needs to be performed on choose counters and stored in modest portions. A cautious strategy is suggested for the approaching week.

In our take a look at Relative Rotation Graphs®, we in contrast varied sectoral indices towards CNX500 (Nifty500 Index), which represents over 95% of the free-float market-cap of all of the listed shares.

An evaluation of the Relative Rotation Graphs (RRG) confirmed the IT, Smallcap and Realty Indices are contained in the main quadrant. They might proceed to outperform the broader market comparatively.

The Commodities, Metals and Midcap Indices are contained in the weakening quadrant. Aside from a number of sporadic stock-specific exhibits, these sectors could not carry out a lot on a person foundation.

Financial institution Nifty has rolled contained in the bettering quadrant; this means a probable finish to its relative underperformance towards the broader market until date. We might even see this sector put up a resilient present within the coming days and should comparatively outperform the broader market.

Nifty Pharma continues to languish contained in the lagging quadrant and it could underperform within the coming days. Aside from this, Media, PSU Banks, Nifty PSE, Auto and the Power Indices are additionally contained in the lagging quadrant. Nevertheless, all these teams are seen consolidating and seem like bettering on their relative momentum.

The Infrastructure Index has additionally rolled contained in the bettering quadrant as are the FMCG, Consumption, Providers Sector and Monetary Providers Indices.

Necessary Observe: RRGTM charts present the relative power and momentum for a gaggle of shares. Within the above Chart, they present relative efficiency towards Nifty500 Index (broader market) and shouldn’t be used straight as purchase or promote alerts.


(Milan Vaishnav, CMT, MSTA, is a Consulting Technical Analyst and founding father of EquityResearch.asia and ChartWizard.ae and relies at Vadodara. He may be reached at milan.vaishnav@equityresearch.asia)