D-st week ahead: Nifty to stay indispensable; Time to prevent fresh aggressive buying

The markets acted in a somewhat fascinating yet reach -based way in the past week and ended in a positive tone. The Nifty oscillated in a narrow tire of 300.80 points during the week, moved between a peak of 25.153.65 and a low point of 24,852.85 before it was closed at 24,870.10. India Vix kept cooling and slipped 5.08% every week to settle at 11.73, due to reduced expectations of volatility. Nifty achieved 238.80 points and marked a weekly progress of 0.97%.

We have a truncated week ahead, because Wednesday is a trading holiday due to Ganesh Chaturthi. The wider structure of the Nifty remains in a ripening consolidation phase in a large symmetrical triangle on the weekly graph.

The index continues to test the upper trend line of this formation, which coincides with the overhead resistance of 25,100-25,150 on the daily period. This zone remains a food area, especially with the daily graph that points to short congestion. Although markets have not been in a strong trend, they press against critical resistance, and a decisive breakout above 25,150 could possibly open an incremental upward momentum. Conversely, any failure to go beyond this reach can strengthen the consolidation bias.

Given the background of the Dovish commentary of FED chairman Jerome Powell, the global sentiment can help a positive start to the truncated week, especially after he reduced a potential rate reduction in September. That said, the first half of the week might witness a gap-up opening. However, Nifty is likely to find resistance around 25,000-25,150 again. On the other hand, support is expected immediately at 24,650, followed by 24,475.

The weekly RSI is 55.06 and remains neutral; It does not show a bearish or bullish divergence at the price. The weekly MacD remains under the signal line and continues to show a negative histogram, which reflects the constant lack of momentum. No clear bullish candle pattern has emerged and the current weekly candle is relatively small, which enhances the decisive nature of the index at this level.

Pattern analysis shows that Nifty still acts within a wide symmetrical triangle, which began to form in September 2024. The longer it stays handy under this resistance line, the more crucial the final movement becomes – or an outbreak or breakdown, a directional movement could herald. The progressive averages of 20 weeks and 50 weeks are placed comfortably below the current price, which suggests a general bullish bias, although not a momentum for the time being.

Given the current technical background and the fact that the coming week was cut off because of the holidays on Wednesday, market participants would do well to approach the week with a balanced prospect. Fresh aggressive purchases must be postponed until Nifty sets a decisive outbreak above 25,150.

Until then, a selective, stock -specific approach with a strict stop loss must be favored. The focus must remain on protecting profits and being responsive instead of anticipatory. The method for the coming week should concentrate on careful optimism with active monitoring of the 25,100-25,150 resistance zone.

In our view of Relative Rotationbravieken® (RRG) we have compared various sectors with the CNX500 (Nifty 500 index), which represents more than 95% of the market capitalization of the free stream of all the shares stated.

Relative rotation graphs show that the car index is the only group in the leading quadrant that retains its relative momentum. All other handy sector indices, such as infrastructure, metal, PSU bank, realty, media, energy and midcap 100, are also within the leading quadrant, but slow down in a relative momentum against the wider Nifty 500 index.

The Nifty Financial Services, PSE and Bank Index are in the weakening quadrant. The raw material index has been rolled into the backward quadrant and is now stuck with the indices for consumption and service sector.

The FMCG index has been rolled into the improving quadrant and can begin its phase of relative outperformance. The IT index remains in the improving quadrant and slows down its relative momentum while retaining important support on the graphs.

Important comment: RRGTM graphics show the relative strength and momentum of a group of shares. In the graph above they give relative performance against the Nifty 500 index (wider markets) and may not be used immediately as buying or sales signals.

(The author is Milan Vaishnav, CMT, MSTA)

(Disclaimer: recommendations, suggestions, views and opinions of the experts are their own. These do not represent the views of economic times)