The markets finished the week on a high note. Despite the fact that the week was cut short with only four trading sessions, the Nifty gained ground.
The markets have been unable to make any meaningful directional calls in recent sessions; however, this week has seen the markets rebound from the bottom edge of the trading zone as a result of substantial short covering from lower levels. The trading range widened somewhat as the index traded in a 467.85 point range. A few key supports were held on the weekly charts, and the main index concluded with a weekly gain of 415 points (+2.45%).
While the previous week was cut short, the coming week will be even shorter. We only have three trading days this week because Tuesday and Friday are trading holidays for Mahavir Jayanti and Good Friday, respectively.
This week is still crucial in terms of technology.
On a closing basis, Nifty defended the 100-week MA as a support. It has also closed a bit higher than its 50-week moving average. The 100-week and 50-week moving averages are now at 17,104 and 17,320, respectively. Apart from that, the index has defended the pattern support in the shape of a falling trend line. The significant rebound that occurred on the last trading day of the week was fueled by short covering. This is obvious.This is clear from the fact that the Nifty Futures have seen a fall in Net OI alongside the rise.
Another factor that should be considered is the substantial drop in volatility. The India VIX fell 15.12% to 12.94. This calls for extreme care as we monitor any additional market movements.
The weekly RSI is 46.23 and is in neutral territory. It exhibits no deviation from the price. The weekly MACD is positive and continues to trade below the signal line. PPO is still negative.
The weekly chart pattern analysis reveals that Nifty has taken support on the declining trendline pattern resistance.
This dropping trendline extends from the high of 18,604 and meets the successive lower peaks.
In addition, the index has defended the 100-week MA, which is at 17,104, and has finished barely above the 50-week MA, which is at 17,320.
This has redrawn the trading range of the Nifty between 16,900 and 17,500.
Until and until one of these thresholds is removed or breached, the index will oscillate in this range.
As we enter the following week and watch for any continuation of the up advance, bear in mind that the Options data show the market will encounter resistance near 17,500 levels. Apart from that, we’ll need to keep a close eye on the VIX. Consistently low India VIX levels will render market players vulnerable to aggressive profit-taking episodes at higher levels.
While we negotiate this technical phase of the markets, we must remain extremely careful and discriminating in our approach. Although leveraged exposures should be kept to a minimum, a cautious stance is suggested for the day.
In our examination of Relative Rotation Graphs®, we compared several sectors to the CNX500 (Nifty 500 Index), which accounts for more than 95% of the free float market capitalization of all the firms listed.
According to RRG research, the Nifty Mid-cap 100, FMCG, PSE, and Infrastructure indices are in the leading quadrant. These sectors are expected to outperform the overall markets. The Nifty Auto and IT sector indexes are also in the leading quadrant, although their relative strength appears to be fading.
The Nifty Financial Services index is in the weakening quadrant, but its relative momentum is increasing. Other from that, the Bank Nifty and PSU Bank indexes are in the declining region.
Nifty Metal has moved farther into the trailing area. These may lead the index to underperform the overall markets, as well as the energy sector index, which is also in the trailing quadrant.
The media index is likewise in the trailing zone, but it is seeking to improve its relative momentum relative to the broader markets. The Property index has marginally rolled into the improving quadrant, while the pharma index is likewise battling to maintain its relative momentum, which is rapidly dropping.
The consumption index is also in the improving quadrant, moving steadily in the northeast direction towards the leading quadrant. This group is expected to do well in the following days.
RRGTM charts demonstrate the relative strength and momentum of a group of equities. They represent relative performance versus the Nifty500 Index (Broader Markets) in the above chart and should not be utilised as buy or sell recommendations.
