MUMBAI, India – The Indian stock market started with a corrective note during the previous week, although it recovered some of its losses during the last two trading sessions.
In the last few trading days, the market featured high volatility, with the Nifty index traded in a much wider range compared to its usual. The Nifty index was trading around more than a 340-point range the previous week, but never saw any clear breakout and only stayed below its record high.
The Nifty ended last week with a 0.84% decline, dropping as much as 104 points. From a broader technical structure, the index has not ventured beyond the existing pattern resistance, which features a rising trend line. Meanwhile, the India VIX volatility index increased by 10.14%, adding 15.56 points from the week before then ended mostly flat.
Nifty is looking towards a tentative start in the coming trading week. Its main resistance will be between the 12,410 and the 12,460 levels, while the support for the index is lower between 12,000 and 12,100 levels. If the market trades in a corrective note again, the trading range of the index will most likely get even broader than usual.
Based on the weekly chart, the Relative Strength Index is currently at 63.28 points, remaining neutral and lacks any chance of divergence from its current level. The weekly MACD is currently trading over its signal line and remains bullish.
The pattern analysis of the chart from the previous week shows that Nifty wasn’t able to infiltrate its resistance levels despite the significant-high during the week. Unless the index can penetrate to its current pattern resistance, there is likely no significant breakout for Nifty in the coming week. Volatility is expected to increase further, and the vulnerability in the market will remain at higher levels, especially with the current derivative series expiry coming along.
The sectoral rotation has also stayed within the expected lines based on the Relative Rotation Graphs review. The Realty and Metal indices extended its gains and remained in place in the leading quadrant. Meanwhile, the Financial Services index and Bank Nifty continued the losing trend from the previous week. The data shows that some pockets might be performing better.
On the other hand, the Nifty Auto index extended its declines, causing it to slip even further in the losing quadrant. The Energy, Consumption, and FMGC packs are also rotating in the weakening quadrant. Meanwhile, the IT index is surging and is advancing towards the improving quadrant. It is looking towards outpacing the broader market.