Weekly Trend Report
- 08 th July 2024
Week Gone By
The key equity benchmarks witnessed substantial gains during the week, rising for the second week in a row. The Nifty settled above the 24,300 level. The broader market outperformed the frontline indices during the period under review. The India Manufacturing Purchasing Managers’ Index (PMI) increased to 58.3 in June from 57.5 in May, thus indicating a sharper improvement in business conditions. Meanwhile, India’s foreign exchange reserves rose by $816 million to $653.71 billion in the week ending June 21st, reversing a decline from the previous week. On the global front, China’s Caixin Services PMI for June came in at 51.2, down from 54.0 in May. While still indicating expansion, the pace of growth has weakened. Additionally, US commerce department reported that US inflation in May slowed to its lowest annual rate in over three years.
Week Ahead
Both foreign and domestic institutional investor activity will be tracked alongside crude oil prices to gauge overall market sentiment. India’s Union Budget in July is a key event, with hopes pinned on growth-oriented policies. The Q1 FY25 earnings season also begins this month, adding another layer of influence. India’s Industrial production data for May and inflation rate June will be released on 12th July 2024. China’s inflation data will also be released on 10th July 2024.
Technical Overview
- The benchmark index continued its upward movement for the fifth consecutive week and ended the week 313 points higher than the previous week’s closing.
- However, compared to the week before last, the trading range narrowed to 408 points from the previous 824 points, with VIX cooling off by 8%.
- Most indices traded in a confirmed uptrend with positive momentum, with Media being the exception, showing significant improvement amidst the downtrend.
- Stocks with a 10-day moving average (MA) are nearing the overbought territory.
- It will be crucial to take new swing positions prudently as the overall weekly swing temperature is getting slightly warmer.
- However, stocks trading above their 50- and 200-day MAs are well above their 50% threshold, indicating a positive primary trend.
- The momentum market breadth remained strongly positive throughout the week, with an improvement in market breadth volume compared to the previous week. This suggests broader participation and decent accumulation.
- The recent sectorial observation also indicates strength in the market.
- On the technical front, the price action on the weekly outlook showed follow-through after surfacing above the Bollinger upper band, with the RSI trading above 74 levels without showing any divergence against the price.
- Derivative front observations indicate consistent call addition at 24500 strike levels, making those areas strong resistance zones.
- A decisive close above a 24500 will allow the price action to continue its momentum on the upside.
- On the flip side, immediate support comes in the zone of 24100-24000, and sustenance above this zone will allow the index to garner further bullish strength.
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