Weekly Trend Report
- 01st July 2024
Week Gone By
The key equity benchmarks witnessed substantial gains, hitting fresh record highs during the week. The Nifty settled above the 24,000 level. The benchmarks were higher for four out of five trading sessions during the week. The broader market underperformed the frontlines indices during the period under review. India’s forex reserves dipped $2.9 billion to $652.9 billion as per RBI. Gold reserves fell by $1 billion to $55.96 billion. During the week, India Commenced a major telecom spectrum auction on Tuesday which offers a total of 10,522.35MHz of spectrum valued at Rs 96,238.45 crore. Meanwhile around the globe, the US consumer confidence index dipped slightly to 100.4 from a 101.3 in May which could signal a potential headwind for consumer spending. Also, China’s industrial profits rose to 0.7% y-o-y in May, down from 4% growth in April.
Week Ahead
The market anticipates a potential volatility in the coming week due to elevated valuations, with investors focused on monsoon progress and its effect on the rural economy. FII and DII activity will be monitored along with crude oil prices to gauge the overall market sentiment. The upcoming Union budget will be a focal point on the expectation of growth oriented policies accompanied by the earnings season kicking off next month which will be another catalyst for market movement. Economic data such as the Manufacturing, Services and Composite PMI data of India, US and China will be released on Monday. Also, the General election in UK is set to take place on Thursday, 4th July’24.
Technical Overview
- The market index began the week with considerable volatility, but after attracting some buying interest near the 10-day moving average, there was a significant technical rebound in the price action.
- It displayed a strong trend with four consecutive higher high candles, climbing 628 points from Monday’s low.
- On the weekly chart, despite pulling back from the upper Bollinger band, the price action encountered strong and immediate resistance at the channel.
- The week concluded with major sectors confirming an upward trend, showing positive and improving momentum.
- As for market breadth, the number of stocks trading above their 10-day moving average has fallen below the 50% mark, while those trading above the 20-day, 50-day, and 200 DMA averages continue to hold above the 50% level.
- Therefore, while the overall trend is positive, it will be critical to see a recovery in the intermediate trend of the stocks; otherwise, it could lead to a more pronounced weakness.
- The momentum breadth has remained positive since the union election, but a declining trend in market breadth volume indicates selective accumulation.
- The weekly RSI stands above 72 levels and remains mildly overbought.
- The index has surged significantly and is currently trading well above its mean. As a result, we expect the markets to pull back from current levels.
- However, this should maintain the primary uptrend, providing an opportunity to capitalize on the bullish strength during the dips.
- Technically, the support levels near 23650 and 23300 will be the key levels to watch. Sustenance above these supports will allow the index to gain bullish strength.
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