Bright Future Today
  • Investing
  • Business
  • World News
  • Stock
Stock

Week Ahead: Nifty Creates Resistance In This Zone; Continue Guarding Profits At Higher Levels

by June 30, 2024
June 30, 2024

After consolidating in the week before this one, the markets resumed their upmove and have ended the present week on a strong note. The markets also navigated weekly derivatives expiry; it did show some signs of fatigue and impending consolidation on the last trading day after rising for four trading sessions in a row. The trading range got a bit wider; the Nifty oscillated in an 824-point range over the past five days. The volatility also surged a bit; India Vix inched higher by 4.72% to 13.80. After trending through the week, the headline index closed with a net weekly gain of 509.50 points (+2.17%). The month has been even stronger; June ended with Nifty gaining 1479.90 points (+6.57%) on a monthly note.

From a technical perspective, the markets are showing initial signs of an impending consolidation from higher levels. Despite the trending move through the week, Nifty has created strong resistance in the 24000—24200 zone as evidenced by the derivatives data. All through the week, the index has seen strong Call OI addition in the strikes falling in this range. On the monthly charts, a candle with a long lower shadow has emerged which holds the potential of temporarily stalling the current upmove. The Nifty now stands mildly overbought on weekly and monthly charts. Going by the technical structure, even if the markets mark incremental highs, they are now heavily prone to some measured corrective moves from the current or higher levels.

It is also important to note that the markets have again run too hard and ahead of themselves. The nearest MA, i.e., 20-week MA is currently placed at 22594 which is over 1400 points below the current close. The 50-week MA is placed at 21194 which is over 2800 points below the current close.  This means that even if there is the slightest mean reversion taking place, we may see the markets coming off significantly from the current levels. If it does that, even then, it will keep its primary uptrend intact. Monday is likely to see a muted start to the week; the levels of 24200 and 24350 are likely to act as immediate resistance levels. The supports are likely to come in lower at 23900 and 23750 levels.

The weekly RSI stands at 72.38; it now remains mildly overbought. The RSI has marked a new 14-period high; however, it stays neutral and does not show any divergence against the price. The weekly MACD is bullish and it stays above its signal line.

The pattern analysis of the weekly chart shows that the prices have closed above the upper Bollinger band. This is generally regarded as bullish even if there is a temporary retracement inside the band. However, looking at the over-extended structure, there are higher chances of the price pulling themselves back inside the band again.

Overall, it is strongly recommended that even if we see the markets attempting to inch higher, one must focus on guarding profits at higher levels rather than giving a blind chase to the upmove. It would be important to rotate the stocks and sectors effectively so that one stays invested in relatively stronger stocks. The pockets like IT and FMCG are also seen improving their relative momentum and are expected to do well. By and large, while keeping the leveraged exposures at modest levels, it is recommended to approach the markets with a cautious approach over 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 that the Nifty Consumption, Auto, Midcap 100, and Metal indices are placed inside the leading quadrant. These groups are expected to relatively outperform the broader markets. However, the Auto, Consumption, and Metal indices are also seen paring their relative momentum against the broader market. The Realty Index is also firmly placed inside the leading quadrant.

The Nifty Commodities, Energy, PSU Bank, Infrastructure, and PSE indices are placed inside the weakening quadrant. Individual stock performances may be seen from these groups but collectively, they may be slowing down on their relative performance.

The Services Sector Index is inside the lagging quadrant. Besides this, the IT and Pharma Indices are also inside the lagging quadrant but they are seen improving their relative momentum against the broader Nifty 500 index.

Banknifty, Nifty Media, Financial Services, and FMCG indices are 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
Silver North Announces Closing of Second Tranche of Private Placement
next post
Here’s Why You Should Be Buying Software NOW

You may also like

Two Down and Two to Go – Capitulation...

May 7, 2025

Week Ahead: While NIFTY Continues To Consolidate, Watching...

May 7, 2025

The Best Five Sectors, #18

May 7, 2025

Four Charts to Track a Potential Market Top

May 7, 2025

Will Trump’s Foreign Film Tariffs Crush Streaming Stocks?...

May 7, 2025

One Rule to Drastically Improve Your Trading

July 4, 2024

Technology Shares SOAR to New All-Time Highs

July 4, 2024

Should You Be Worried About Poor Market Breadth?

July 3, 2024

Could AMZN’s Stock Hit $3 Trillion Valuation? What...

July 3, 2024

Market Breadth is Narrowing – Should You Be...

July 3, 2024

    Join our mailing list to get access to special deals, promotions, and insider information. Your exclusive benefits await! Enjoy personalized recommendations, first dibs on sales, and members-only content that makes you feel like a true VIP. Sign up now and start saving!


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

    Recent Posts

    • Israeli military issues unprecedented evacuation warning for Yemen’s international airport

      May 7, 2025
    • India launches military operation against Pakistan, explosions heard

      May 7, 2025
    • Netanyahu chooses war – and his political survival – as Israelis demand hostage deal

      May 7, 2025
    • Israeli airstrike on central Gaza school compound housing displaced people kills 22, as military operation intensifies

      May 7, 2025
    • India and Pakistan are on the brink of all-out war. Here’s what we know

      May 7, 2025
    • About us
    • Contacts
    • Privacy Policy
    • Terms and Conditions
    • Email Whitelisting

    Copyright © 2025 brightfuturetoday.com | All Rights Reserved

    Bright Future Today
    • Investing
    • Business
    • World News
    • Stock