08.12.2019
AAKASHAYA PATRA WEEKLY MARKET OVERVIEW:
The Nifty has been
trading in a 200-point range in the past 14 sessions. It was at least 6 times
in the last 14 days, that the index attempted to overcome the 12,000 mark on a
closing basis; it managed to do so on 7th November but with a bearish formation
on the charts. The Nifty did sustain above the 11,800 mark during the period
but posted bearish or indecisive formations. The volumes have been below
average and the market breadth was negative on most of the days. Even on a
positive day like Tuesday (19th November) when the Nifty posted a 55.6 point
gain, the breadth was negative. Domestic institutions have been net sellers in
the month of November until now and FIIs too have turned net sellers in each of
the past four trading days. The index heavyweight Reliance Industries and BFSI
stocks held the Nifty near its lifetime highs. With the help of these, for the
second consecutive week, the Nifty has been able to hold the crucial support of
11,800. Interestingly, this is also the gap area of 30th October. Even though
the gap is filled, the Nifty has been sustaining itself above the mark on a
closing basis. For the next few days also this area of support is critical for
the market.
Structurally, if the
Nifty closes below the 11,800 mark, it will have a downside implication of
about more than 200 points. It also indicates that the up move seems to be
over. On the weekly chart, the Nifty formed a back to back small body
long-legged candle for the past two weeks. These formations suggest
indecisiveness. These formations are a results of several such candles on the daily
chart for the past ten days. In any case, if the rally extends and the Nifty
closes above its 8th November high of 12,034, there are chances of it reaching
a new life-time high. So far, the bulls are defending the critical support of
11,800 and the bears are active at the higher levels or near to the resistance
at the 12,034 mark on the Nifty. However, the broader market is not
participating in this strength. Major sectors like IT are lagging for the past
few weeks. And small and mid cap indices have actually closed in the negative
last week. Even though a selective few mid and small caps are performing well,
the representative indices are lagging. The Nifty Midcap-100 index is
oscillating around its 200-DMA. The Nifty small cap-100 index is still 5 per
cent down from its 200-DMA. The Midcap-100 looks better than the Smallcap 100,
structure-wise. The major indicator, RSI, has broken down from an upward channel
and is forming a base around the 60 levels or within the bullish zone. The MACD
histogram is in the negative on the daily chart, although there has not been
any negative momentum picking up. On the weekly charts, it is still strong
enough to protect the bullish momentum. If the volumes increase on positive
days coinciding with the Nifty closing above 12034 levels, then it would be a
big bullish sign for the market in the current scenario. We suggest keeping
11800 as a stop loss for long positions and adding fresh longs on the Nifty
closing above 12034 on closing basis. We can expect a decisive move in the
coming week. In short, the market is trading in a 200 point range with low
volatility. As long as this indecisive nature continues, the market may have
some more lackluster sessions. On a breakout on either side, the possibility of
a sharp move in the respective direction cannot be ruled out. As the Nifty is
trading near its resistance area, be with the positive momentum.
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