D-St week ahead: Nifty may face resistance in 10,900-10,975 zone

It was a volatile end to the week as the NSE benchmark Nifty oscillated in a 100-point range on Friday and finally settled with a modest loss after rebounding from the lower levels.Once again, just like the week before, no major downsides were seen, and the index managed to mildly pierce the 50-week moving average, which is at 10,748. After a limited oscillation in a defined range, the headline index ended with a modest gain of 67.60 points or 0.63 per cent for the week.Market continued to remain poised at a critical juncture. Despite exhibiting buoyant undercurrents, it struggled in moving past the important level of 10,940 which is a lower top created couple of weeks back. We expect a neutral start to the week and Nifty is expected to inch higher if it manages to move past few critically important levels on the daily charts.The coming week is likely to see the levels of 10,900 and 10,975 playing out as important resistance area. Supports may come in at 10,710 and 10,600 mark.The Relative Strength Index (RSI) on the weekly chart stood at 50.5616 and it continued to remain neutral against the price. Weekly MACD was bullish and it remaind above its signal line. 67509346 PPO is positive and remained in continuing buy mode. A black body emerged on candles. Given the present structure on the charts, it remains insignificant.From the pattern analysis, it is observed that after forming the high of 11,760 and subsequent corrective decline, the Nifty has formed a lower top in 10,940-10,950 zone. The index has mildly penetrated the 50-week moving average, which is at 10,748. The index will have to move past this 10,940-10,950 area for a sustainable upmove.Overall, despite the market exhibiting buoyant undercurrents, the coming week has potential to go on either side. It would be technically important for the markets to keep its head above 50-week moving average to avoid any immediate weakness.Given the overall technical structure and considering the F&O data, we are unlikely to see any significant structural downsides. We suggest continuing to make select purchases during this period of consolidation. However, unless 10,950, which is also a major pattern resistance on the daily chart is breached on the upside, profit must be vigilantly protected at higher levels.In our look at Relative Rotation Graphs, we compared various sectors against CNX500, which represents over 95 per cent the free float market-cap of all the stocks listed. 67509354 67509358 67509362 The study of the Relative Rotation Graphs (RRG) show some interesting technical developments taking place. The key sectors like Nifty Next 50 (Nifty Jr), Bank Nifty, Nifty Midcap, Infrastructure and Financial Services index have shown distinct signs of slowdown in momentum and possibility of some consolidation in these groups. The Consumption and PSU Bank Indexes are the only two groups, which remain firmly placed in the leading quadrant while keeping its momentum intact. These groups are likely to relatively out-perform the broader markets.The realty Index and the auto Index remain in the improving quadrant and they are also seen consolidating their positions and improving their relative momentum against the general markets.The Nifty PSE, metal, and FMCG index are not likely to put up any eye-catching show. However, energy, pharma and IT indexes are seen attempting to stabilise and are likely to put up stock specific performances in the coming week.(Milan Vaishnav, CMT, MSTA is Consultant Technical Analyst at Gemstone Equity Research & Advisory Services, Vadodara. He can be reached at milan.vaishnav@equityresearch.asia)

from Economic Times http://bit.ly/2RmibDH