Nifty consolidates under resistance, key supports are in the midst of cautious prospects

The markets showed a strong undertone in the truncated trade week when they finished in a positive tone after breaking a loss of six weeks. Nifty remained within a relatively narrow range, oscillating between 24,347 and 24,702, with a weekly trading range of only 355 points. Despite a short week because of the Independence Day holiday on Friday, the index achieved a win of 268 points or 1.10%. India Vix, which meter volatility, rose modestly by 2.68% to 12.35, which indicates a slightly increased risk reception but still remained comfortably low.

The wider structure suggests that Nifty is currently moving in a reach -based way, confronted with overhead pressure of the falling trend line resistance that extends from the height texts. Although the index has succeeded in staying above the most important advancing averages in the short term, the overall structure will remain that of a non-bushing market for the time being. The continuous consolidation just below the resistance zone of 24,800 – 25,000 reflects a cautious but resilient undertone. A decisive movement above this zone can restore an upward boost, while any drift under 24,200 can intensify the sales pressure.

Given the current setup, Nifty can see a lukewarm start in the coming week. The immediate support is placed on 24,200, followed by stronger support near 23,880. On the higher side, the resistance exists at 24,800 and then at 25000. Unless the index breaks above this resistance zone with strong volumes, any advantage can be covered. The weekly RSI is 52.50; It remains neutral and shows no divergence at the price. The RSI suggests that the market is neither overbought nor sold over. The weekly MacD remains under the signal line, which is a reflection of the constant lack of positive momentum.

From the point of view of a pattern analysis, the Nifty remains under a falling trend line from recent highlights, which acts as stiff resistance. While the index is still acting above its advanced averages of 50 weeks and 100 weeks (24,191 and 23,148 respectively), the lack of strength to challenge the falling trend line indicates a break in Bullish Momentum. The wider upward trend remains intact as long as the index holds above its average of 50 weeks, but for now the absence of a new breakout keeps the trend vulnerable to consolidation.

A cautious and stock -specific approach will be advised in the coming week. With the index still under the most important resistance levels and no breakout confirmation, buying should be avoided aggressively. Traders would do well to protect profits and to keep a close eye on the level of 24,200 as an important support. A measured and vigilant approach with strict stop losses would be the best way to navigate in the coming week.

In our view of relative rotation trapcs® we have compared various sectors with the CNX500 (Nifty 500 index), which represents more than 95% of the free-matted market capitalization of all the shares stated.

Relative rotation graphs (RRG) show that the car -index has been rolled into the leading quadrant and shows an improved relative momentum together with the infrastructure index, which is also placed in this quadrant.

The handy media, realty, metal, pse, psu bank, midcap 100 and energy indices are also in the leading quadrant. All these indices show a sharp mating of a relative momentum against the wider markets. Their relative performance can therefore decrease somewhat.

The Nifty Financial Services and Nifty Bank Index show that the relative momentum is being improved while staying in the weakening quadrant.

The Nifty Services Sector Index remains a strong improvement in the relative momentum, together with the FMCG index, while it is in the Kwadrant lagging behind. In addition, the consumption and the raw materials indices remain in the backward quadrant.

The Nifty Pharma and the IT index are placed in the improving quadrant. Given their rotation process, they are expected to continue to improve their relative performance against the wider markets.

Important comment: RRG ™ maps show the relative strength and momentum of a group of shares. In the graph above they show relative performance against the NIFY500 index (wider markets) and may not be used immediately as buying or sales signals.

Milan Vaishnav, CMT, MSTA, is a Consulting Technical Analyst and founder of EquitySearch.asia and Chartwizard.ae and is located in Vadodara. He can be reached on milan.vaishnav@equiteresearch.asia

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