By Anand James Has momentum slowed down again? We had started last week with the expectations that a potential entry into the 25k could be delayed, despite deciding to persist with the uptrend that got re-ignited last Friday. We were encouraged to drop our guard a bit but had clearly pencilled in resting points on the way, which did provide for pullback trades. Despite all the drama, Nifty did push higher, though with a lot of huffs and puffs, and barely reaching 24900. This is a sign that momentum has indeed slowed down, with DMI and ADX the directional moving indicators, easing off. In fact, an uptick in momentum was what encouraged us to stay with the uptrend last week, though we had spotted several resistances that would, and did stall the ascent. This week, we begin with no visible signs of momentum, while standard deviation studies to potential rise in VIX, a sign of which we saw on Friday as well, wherein VIX closed 4.25% higher despite a positive close in Nifty. There are no signs of a collapse as well, but we expect a lack of premium expansion as well as slowness in ascent which will surely cramp the style of option as well as stock traders respectively. Nifty aims to set new course We had gone in last week with upside expectations limited to 24975, and we are still missing signs for an explosive uptrend. Favoured view sees a fair possibility of peeping above 25k, or spiking to 25365, neither of which is expected to sustain, but there is a surprise element here, and VIX’s status at this point could give a better colour to the picture. The downside marker for the week may now be pushed higher to 24530. Has Nifty Bank got the green signal? Despite a down close in Nifty Bank on Friday, there is indeed a case for the index outperforming Nifty in the next week. This is because, while 64% and 76% of Nifty 500 and Nifty 50 stocks are now trading above 20-day SMA, only 50% of Nifty Bank’s constituents are trading above this key MA, suggesting that the possibility of tailwind is higher in Nifty Bank. We will keep this view with a downside marker placed near 50600, but the upsides may be limited to 51800. Also ReadInvestors Beware! NSE, BSE jointly advise investors to avoid false claims by fraudsters Sectoral Cues: The Nifty Metal Index has bounced back this week from the pattern support of 8800 and ended as the biggest weekly gainer. The stock is trading well above its 50 and 100-week moving averages hinting at strength. We continue to maintain our targets of 9750/9970 for the index in the coming weeks and such a move could be led by stocks like Jswsteel, Tata Steel, Hindalco, NMDC, Vedanta and Jindal Steel. The Nifty FMCG Index is breaking out of the multi-week consolidation range. The MACD has broken above the signal line in the daily time frame offering confirmation. We expect the index to move towards 66000 in the next few weeks. Expect Hindunilvr to lead the upside while Dabur and Marico could follow. The expected bounce back has come in the Nifty Financial Services Index and we continue to maintain our stance that the index could struggle as long as it stays below 23450. The Evening Star candle pattern in the monthly time frame and the MACD breaking below the signal line in the weekly time frame are in favour of weakness. Apart from Bajaj Finance and Bajaj Finserv, the rest of the majors could find it difficult to scale. Nifty Realty Index has formed an Evening Star candle pattern in the monthly time frame. Also, the MACD histogram has shown signs of exhaustion at higher levels and monthly RSI is in the overbought region hinting at more pullback in the near term. (Disclaimer: Anand James is the Chief Market Strategist at Geojit Financial Services. Views, recommendations, opinions expressed are personal and do not reflect the official position or policy of Financial Express Online. Readers are advised to consult qualified financial advisors before making any investment decisions. Reproducing this content without permission is prohibited.)
