Weekly Trend Report
- 10th June 2024
Week Gone By
With the conclusion of the Lok Sabha polls and the RBI meeting, attention now turns to global factors. Key areas to watch include the rupee’s movement against the dollar and crude oil prices. Additionally, investments by foreign portfolio investors (FPIs) and domestic institutional investors (Dils) will remain under close observation. China’s inflation rate for May will be released on Wednesday, 12 June 2024. US core and consumer price inflation figures for May will be announced on Wednesday, 12 June 2024. US Fed interest rate decision and FOMC economic projections are scheduled for release on Wednesday, 12 June 2024.
Week Ahead
In a rather turbulent week, both the Sensex and Nifty experienced their most significant single-day drop in four years. However, despite this sudden downturn, the market has managed to rebound swiftly, reaching new highs once again, buoyed by BJP-led NDA’s re-election and global optimism. Ten out of thirteen sectoral indices ended on a positive note except Capital Goods, Oil & Gas and the Power sector. The Realty and IT sector stocks rose the most. The Reserve Bank of India (RBI) monetary policy committee (MPC) voted to keep the repo rate unchanged at 6.5%. The equity market edged higher in four out of five trading sessions in this week. The Nifty settled above the 23,250 mark.
Technical Overview
- The markets had an incredible eventful week as they reacted to exit polls and the general election results. Nifty50 gapped higher on Monday cheering the exit polls and scaled to fresh life-highs. It closed the first trading session of the week with a hanging man candle pattern and it succumbed to high volatility and severe selling pressure due to the announcement of election result. A remarkable recovery also followed bolstering a weekly closing with 759 points (3.4%) in green allowing the index to reclaim the ascending channel resistance once again. With this the price action now trades at a distance of nearly 3% away from the mean.
- This also led to the formation of a weekly long legged hanging man candle and their occurrence near the high point have the potential to halt the ongoing uptrend.
- The VIX came off 31.4% on a weekly basis.
- The RSI on weekly timeframe confirmed a bearish divergence after failing to scale to new highs contrary to the price action.
- While most sector’s uptrend remain under pressure, on the market breadth front, stocks trading above 10 daily MA surged into the overbought territory while those over their 20 and 50 daily MA have crossed above their 50% threshold. This also implicates early sign of mild profit-booking. The populace of stocks above their 200 daily MA are well above 65% threshold which is a positive sign. The momentum market breadth remained positive for majority of the week. The market breadth volume saw sharp rise on the exit poll shakeout and continued to remain volatile.
- In anticipation of the index to trend sideways, the zone of 22620-22470 holds a very crucial support zone. Sustenance above this supporting cushion will allow the index to garner bullish strength and a breach below this zone can invite further selling pressure.
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