Dalal Street week ahead: Realty counter looks tired; IT and metals may see action

Despite remaining overbought, the benchmark Nifty50 put up a resilient performance as the index ended flat on a week-on-week basis, ending 13.10 points or 0.14 per cent down. Some minor correction was seen during the week, but the weekly charts still remained overbought. We have an extended week-end, and, therefore, a shortened expiry week ahead. Overall, the market is likely to remain uneventful and should trade with a corrective bias. We will also see some volatility creep in over the next few days.

The 9,660 and 9,710 levels will continue to act as critical resistance in the coming week. Supports should come in at 9,550 and 9,475 levels.

The Relative Strength Index or RSI on the weekly chart stood at 71.2819. Though they remain neutral showing no divergence against price, they still continue to trade moderately overbought. The weekly MACD is still bullish trading above its signal line. However, it is moving towards reporting a negative crossover.

Pattern analysis shows no signs of any significant downtrend formation or any immediate top on the weekly charts. The breakout from the 8,900-8,950 levels continues to remain valid, though some signs of short-term tiredness are seen.
Overall, the oscillators on the daily charts have corrected significantly, but they still remain moderately overbought on the weekly charts. This may cause the market to see corrective action for some more time. In the coming week, adopting a stock-specific approach with a high degree of caution along with preservation of cash is advised.



A study of relative rotation graphs or RRG shows all major broad indices such as CNX100, 200, 500, Nifty JR, PSU banks, Energy, Infrastructure, Media, CNX Midcap indices are distinctly weakening. The realty index is struggling to relatively outperform the market, but is losing momentum as well. In the coming week, we will see IT and Metal stocks continuing to consolidate their performance and may attempt to strengthen themselves.



A relative out-performance will be seen from pockets of Auto, Financial Services and FMCG stocks and they are expected to outperform the benchmark.

Important Note: RRGTM charts show you the relative strength and momentum for a group of stocks. In the above chart, they show relative performance as against Nifty Index and should not be used directly as buy or sell signals.

(Milan Vaishnav, CMT, is Consultant Technical Analyst at Gemstone Equity Research & Advisory Services, Vadodara. Contentions made in this article are mere observations. Investors should consult their financial advisers before taking any positions based on these remarks. Views expressed are the author’s own do not represent those of ETMarkets.com. The author can be reached at milan.vaishnav@equityresearch.asia)