Trading range likely to be wider than usual next week; How to navigate D-St – Economic Times | Jewelry Dukan

While Indian equities remained resilient and outperformed global markets, they delayed their breakout as they continued to resist key pattern resistance on the charts. While a strong attempt was made to break through the key resistance zones, the inflation numbers again played spoilsport. US markets reacted negatively to the inflation data and the impact was also felt in Indian equities.

Nifty50 has also traced back the psychologically important 18,000 levels. Markets saw a range of 598.90 points for the past five sessions. They ended up with a net loss of 302.50 points (-1.70%) on a weekly basis. Without the loss on the last trading day of the week, the markets headed for a flat close.

Before we continue examining the technical structure of the charts, it’s important to note that the expected Fed rate hike due this week is also keeping markets on edge. The latest inflation data has given the Fed enough leeway for another 75 basis point rate hike; Anything else above that would be taken very negatively by the markets.


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From a technical perspective, one important thing to note is that Nifty does not break above the key resistance of the falling trend line pattern. Said pattern trendline resistance is important as it starts from Nifty’s lifetime high at 18,600 and joins subsequent lower highs.

Having not broken out of this resistance yet, Nifty is holding in a broad range of 17,700 on the upside and the 50-week ma on the downside, which currently stands at 17,136. This makes the 17,100-17,700 zone a trading zone for the index unless a sustained directional bias is seen. Volatility also increased; The Indian VIX rose 11.88% to 19.82 for the week.

Next week 17,700 and 18,000 levels are likely to act as resistance points. The supports will arrive at the 17,400 and 17,310 levels. The trading range is likely to remain wider than usual.

The weekly RSI is 56.40; it remains neutral and shows no deviation from the price. The weekly MACD is bullish and remains above its signal line. No notable and important formations were seen on the candles.

By and large, markets have become heavily stock-specific. The best way to navigate such markets would be to stick with stocks that are showing increasing relative strength, or at least improving. This ensures that the shares will outperform the broader markets as markets develop; However, during tough times, these stocks tend to offer great resilience to weakness. We will see select stocks put on a good show across all sectors; At the same time, one particular sector is unlikely to dominate the landscape.

In addition to a stock-specific and selective approach, it is also recommended to keep global exposure under control, avoid excessive leverage and keep global exposure moderate and low. Caution is advised for the coming week.

In our look at Relative Rotation Graphs®, we compared various sectors to the CNX500 (NIFTY 500 Index), which represents over 95% of the free float market capitalization of all listed stocks.

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Analysis of the Relative Rotation Graphs (RRG) shows no significant changes in overall sector placement. NIFTY Realty, Midcap 100, Financial Services, PSU Bank and Bank Nifty are placed within the leaders. These groups are likely to remain resilient and relatively outperform the broader Nifty500 Index. The Nifty Consumption Index rolls into the weaker quadrant. That being said, the Nifty Auto and Nifty FMCG indices remain in the weaker quadrant.

The Nifty IT Index remains in the weaker quadrant, along with the Nifty Media and Pharma indices. Nifty Energy is also within the weakening quadrant, but can be seen greatly improving its relative momentum.

Nifty Metal continues to make great strides within the improving quadrant with the Nifty Commodities Index. These two sectors are also expected to show resilient performance versus the broader markets.

Important note: RRGTM charts show relative strength and momentum for a group of stocks. In the chart above they show relative performance against the NIFTY500 Index (broader markets) and should not be used directly as buy or sell signals.

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