Insiders Advisor
  • Stocks
  • World News
  • Business
  • Politics
  • Stocks
  • World News
  • Business
  • Politics

Insiders Advisor

Stocks

Week Ahead: NIFTY Shows Early Signs Of A Likely Disruption Of Uptrend; Tread Cautiously

by September 7, 2024
September 7, 2024
Week Ahead: NIFTY Shows Early Signs Of A Likely Disruption Of Uptrend; Tread Cautiously

After initially forming a fresh incremental lifetime high, the markets succumbed to selling pressure from higher levels after spending some indecisive sessions during the week. The week that went by saw some early signs of the Nifty entering into broad corrective consolidation while ending near its low point of the trading range. Given the corrective undertone, the trading range got wider as well; the Nifty 50 oscillated in a 532.35-point trading range. The volatility spiked as well; the volatility barometer India VIX surged by 13.63% to 15.22 on a weekly basis. While setting a distinct corrective undertone, the headline index closed with a net weekly loss of 383.75 points (-1.52%).

In the previous technical note, it was categorically pointed out that the Nifty stays significantly deviated from its means; the nearest 20-week MA which is at 23795 is 1057 points below the current levels. The 50-week MA which is at 22208 is currently over 2640 points below the current close. Even if the Nifty attempts a modest mean-reversion, it can see this corrective bias getting extended. The derivative data suggests that the Index has dragged its resistance levels lower; the zone of 25000-25250 is now an important resistance for the index. So long as the Nifty is below this zone, it is likely to stay prone to profit-taking bouts from higher levels.

Expect the markets to start the fresh week on a soft and tepid note. The levels of 25075 and 25250 are likely to act as resistance points for Nifty; the supports come in lower at 24600 and 24480 levels.

The weekly RSI stands at 67.74; it has slipped below the 70 levels from the overbought area which is bearish. It however stays neutral and does not show any divergence against the price. The weekly MACD is bullish and above its signal line; however, the narrowing Histogram hints at an imminent negative crossover in the coming weeks.

A Bearish Engulfing candle has emerged; the occurrence of such a candle following an uptrend has the potential to disrupt the current trend. However, this will need confirmation going ahead from here.

The pattern analysis of the weekly chart shows that the markets are showing some first signs of fatigue at higher levels. The zone of 25000-25250 has become an immediate resistance zone and until the Nifty moves past this zone convincingly, it is unlikely to show any trending move on the upside. It continues to deviate from its mean; this may keep the index somewhat vulnerable to corrective retracements.

All in all, the markets will likely continue exhibiting tentative behavior; unless the mentioned resistance zone is not taken out convincingly, the Nifty may remain under broad consolidation or corrective pressures. Defensive setup may also remain evident, pockets like IT, Pharma, FMCG, Energy, etc., may do well. Avoiding excessive leveraged exposures and staying highly selective while making fresh purchases is strongly recommended. While vigilantly guarding profits at higher levels, a cautious approach is advised for the coming week.

Sector Analysis for the coming week

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.

Relative Rotation Graphs (RRG) show the Nifty Pharma, IT, Consumption, and Midcap 100 indices are inside the leading quadrant. Though the Midcap 100 index is giving up on its relative momentum, these groups are likely to relatively outperform the broader markets over the coming weeks.

The Nifty Auto and PSE Indicex are inside the weakening quadrant; the PSE pack is showing strong improvement in its relative momentum against the broader Nifty 500 index.

The Nifty Financial Services, Commodities, Infrastructure, Banknifty, PSU Bank, Metal, the Realty indices continue to languish inside the lagging quadrant are are set to relatively underperform the broader Nifty 500 index. The Nifty Energy Index is also inside the lagging quadrant; however, it is seen sharply improving its relative momentum against the broader markets.

The Media and the Services sector indices are currently placed inside the improving quadrant.

Important Note: RRG™ charts show the relative strength and momentum of a group of stocks. In the above Chart, they show relative performance against NIFTY500 Index (Broader Markets) and should not be used directly as buy or sell signals.  

Milan Vaishnav, CMT, MSTA

Consulting Technical Analyst

www.EquityResearch.asia | www.ChartWizard.ae

previous post
Allan Lichtman predicts Harris as 2024 winner because ‘Democrats got smart’ and did this
next post
Trump or Harris? Israelis discuss presidential choice as war with Hamas, other terror groups continues

Related Posts

Technology Stocks Back In the Lead: Are Inflation...

May 3, 2024

Semiconductors Are Down: Is Now the Time to...

July 31, 2024

What’s Really Driving Tesla’s Surprising Stock Surge?

April 24, 2024

Will Technology Drive S&P Higher in October?

October 3, 2024

Two Indicators to Improve Your Edge

October 26, 2024

S&P 500 Breakdown Alert! Downside Targets Explained

January 10, 2025

Dow Theory Bull Confirmed! What Happens Next?

July 16, 2024

The Top Performing Sector is Utilities?!?

May 9, 2024

Top Ten Charts for August: Two Tempting Consumer...

August 20, 2024

Alibaba Returns to the Scene of the Crime

June 8, 2024

    Become a VIP member by signing up for our newsletter. Enjoy exclusive content, early access to sales, and special offers just for you! As a VIP, you'll receive personalized updates, loyalty rewards, and invitations to private events. Elevate your experience and join our exclusive community today!


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Latest News

    • Democrats doubt Trump will secure Ukraine cease-fire in Alaska summit with Putin

      August 16, 2025
    • ‘Absolutely incredible’: B-2 bomber, F-35 escort set stage for Trump-Putin talks in Alaska

      August 16, 2025
    • Warren Buffett’s Berkshire Hathaway reveals new stake in beleaguered insurer UnitedHealth

      August 16, 2025
    • Lyft co-founders to step down from ride-hailing firm’s board

      August 16, 2025
    • Hawley opens probe into Meta after reports of AI romantic exchanges with minors

      August 15, 2025
    • Apple Watch getting redesigned blood oxygen feature following legal dispute

      August 15, 2025

    Categories

    • Business (1,350)
    • Politics (6,751)
    • Stocks (904)
    • World News (461)
    • About us
    • Contacts
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: insidersadvisor.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2024 insidersadvisor.com | All Rights Reserved