Dalal Street Week Ahead: Steep up move unlikely until Nifty crosses 18,350-18,500 zone
The trading range got wider this week as Nifty oscillated in a 398-point range over the past five sessions. While continuing to resist the key levels, the headline index closed with a net loss of 111.40 points (-0.61%) on a weekly basis.
VIX, too, saw a decline. While staying at relatively one of its lowest levels, India VIX declined by 4.28% to 12.30.
With May derivatives expiry next week, market would be influenced by expiry and rollover-centric activities. The derivative data shows Nifty is facing stiff resistance in the 18,350-18,500 zone. Unless this zone is taken out meaningfully, no runaway rally can be expected in the markets.
In his speech yesterday, the Fed chief Jerome Powell made highly scripted and unclear remarks by saying it is unclear if US interest rates will need to rise further. He further said that the central bank would now make decisions “meeting-by-meeting” by adding that after a year of aggressive rate increases, they can afford to look at the data to make careful assessments.
![Nifty snip 1 Nifty snip 1](https://img.etimg.com/photo/msid-42031747/et-logo.jpg)
Monday could see a quiet start as Nifty is likely to face resistance at 18,350 and 18,480 levels. The supports will come in at 18,040 and 17,800 levels. The trading range will stay wider than usual.
The weekly RSI is 57.50. It stays below 60 and neutral without showing any divergence against the price. The weekly MACD is bullish and trades above the signal line. No notable formations were seen on the candles.
The pattern analysis shows that Nifty is playing out well to the falling trend line that begins from 18,600 and joins the subsequent lower tops. The index resisted this trendline multiple times before crossing above it and taking support on it twice. Right now, the index trades near another pattern resistance point of 18,389. This makes the 18,350-18,500 zone a strong resistance zone for the index.
All in all, we are not yet completely out of the woods. The technical structure of the markets suggests that the ranged consolidation may continue and the market will continue finding selling pressure at higher levels. There is no technical evidence present on the chart that suggests a steep decline, however, there won’t be any steep up-move in the market either unless the 18,350-18,500 zone is taken out convincingly.
It is strongly recommended to continue approaching the markets on a highly selective basis and vigilantly protect profits at higher levels.
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.
![Nifty snip Nifty snip](https://img.etimg.com/photo/msid-42031747/et-logo.jpg)
![](https://img.etimg.com/photo/msid-42031747/et-logo.jpg)
The analysis of Relative Rotation Graphs (RRG) shows Nifty Realty, NiftyBank, Consumption, and Financial Services indices are inside the leading quadrant. These groups are likely to show relative outperformance against the broader Nifty 500 Index. The FMCG, Midcap 100, and Infrastructure indices are also inside the leading quadrant. Some relative outperformance can be expected from these groups as well but they appear to be giving up on their relative momentum.
Nifty PSE Index has rolled inside the weakening quadrant. The Auto index also stays in the weakening quadrant but it also shows some improvement in its relative momentum.
The Nifty PSU Bank index has rolled inside the lagging quadrant. The IT Index is also seen languishing inside the lagging quadrant. The Media, Commodities, and Metal indices are also seen placed inside the lagging quadrant.
The Energy and the Pharma Indices are placed inside the improving quadrant.
Important Note: RRGTM 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.
For all the latest Business News Click Here
For the latest news and updates, follow us on Google News.