While successfully keeping its head above crucial levels, the index closed with a net loss of 171 points (-1.06%) on a weekly basis.
From a technical perspective, Nifty defended the 16000-level. This is the upper edge of the 15,700-16,000 zone which Nifty had violated on its way down. During the recent corrective move, the index has managed to defend this zone. Besides this, the Nifty has also managed to keep its head above the important 100-WMA levels. Nifty managing to stay above 15,700-16,000 levels was and will continue to remain important over the coming weeks. Therefore, Nifty keeping its head above 16,000 will be crucial to watch. Any slip below this point may lead to some more weakness. However, as of now, this seems less likely.
Volatility also declined a bit. India VIX came off by 4.34% to 17.60 on a weekly basis. The coming week is likely to start on a buoyant note. The levels of 16,180 and 16,495 would act as potential resistance points. The supports will come in at 15,900 and 15,710 levels. The trading range is expected to get wider than usual.
The weekly RSI is 44.78, it stays neutral and does not show any divergence against the price. The weekly MACD is bearish and below the signal line. However, the narrowing slope of the Histogram hints at a possible positive crossover over the coming weeks.
A bearish Harami emerged on the candle. A Harami candle is formed when a current candle is completely engulfed by the previous candle. There is also a Spinning Top formation on the candle. This is formed due to a small real body and often denotes periods of consolidation or indecisive behaviour of the market participants. The pattern analysis of the weekly chart shows that the Nifty has managed to keep its head above 16000 levels, this is the upper edge of the support zone that the Nifty violated on its way down. The index has managed to crawl back above this and has stayed above this, which is a positive sign.
Overall, we will see the markets getting stable. There are greater chances that after a bit of consolidation that was witnessed in the previous week, we see the markets resuming their up move. There is no major change in the sectoral setup that was there in the previous week.
Financials may likely try to perform better and economy-facing stocks like autos, etc., could do well along with some defensive sectors. It is recommended that one should avoid shorting the markets so long as they keep their head above the 16,000 levels. As the markets are above this point, all dips must be used for making quality purchases at lower levels.
In our look at Relative Rotation Graphs®, we compared various sectors against CNX500 (Nifty 500 Index), which represents over 95% of the free float market cap of all the stocks listed.
The analysis of Relative Rotation Graphs (RRG) shows that there is no major change in the sectoral setup that was seen in the previous week. Defensive groups like Nifty FMCG, consumption and high-beta sectors like Nifty Auto stay in the leading quadrant; they are likely to relatively outperform the broader markets. Bank Nifty is also inside the leading . Nifty Services sector, realty, and financial services sector indices are inside the improving quadrant; they are seen maintaining and further improving their relative momentum against the broader Nifty500 index.
Nifty Pharma is inside the weakening quadrant; it is seen turning around by improving its momentum and may show stock-specific outperformance going ahead from here. Apart from this, Nifty PSE, Infrastructure, and Nifty Energy are inside the weakening quadrant. Nifty IT, PSU Bank, and Nifty Media are inside the lagging quadrant, however, they are seen trying to consolidate their position and may try to post resilient performance if this trend continues.
Apart from this, Nifty Metals and Commodities indices are seen languishing inside the lagging quadrant.