Weekly Trend Report
- 29th November 2024
Week Gone By
The Indian benchmark indices ended higher, with the Nifty closing above 24,100 and the Sensex surpassing 79,800, reflecting a bullish trend in the domestic market. In contrast, global markets faced pressure due to disappointment over China’s fiscal stimulus package and renewed tariff concerns from the Trump administration. U.S. technology stocks declined amid growing concerns that the Federal Reserve might adopt a cautious stance on rate cuts following persistently high inflation data. Additionally, major auto OEMs saw declines due to nervous market sentiment, as their supply chains are deeply integrated across Canada and Mexico. The tariff announcement triggered a dollar rally, with the U.S. dollar gaining 1% against the Canadian dollar and 2% against the Mexican peso.
Week Ahead
Traders are anticipating the RBI’s monetary policy decision, set to be announced on December 6. The HSBC Manufacturing PMI data will be released on December 2, followed by the HSBC Composite and Services PMI data on December 4. Globally, China’s Caixin Manufacturing PMI will be out on December 2, while the US ISM Manufacturing PMI will also be released the same day. Additionally, the US JOLTs Job Openings data is scheduled for December 3, and the ISM Services PMI will follow on December 4. US Fed Chair Jerome Powell is set to deliver a speech on December 5.
Technical Overview
- The Nifty50 index started the trading week on a strong note, gapping up over 300 points as it attempted a recovery from the support of the 50-week moving average. This positive movement followed the recent state elections, which had garnered optimism in the market.
- However, the index hit an intermediate top on Monday and subsequently consolidated for the next two trading sessions. By the end of the week, it had gained 223 points from the previous week, indicating a shift in its status to a rally attempt.
- Volatility decreased during the week, closing at 14.42, down 10.39% from the previous week.
- The last week saw most broader and sectoral indices changing their status to potential rally attempts. Contrastingly, all indices exhibited positive and improving momentum, which is a highly encouraging development.
- In terms of market breadth, the percentage of stocks trading above short-term moving averages showed significant improvement, indicating a stronger trend and momentum overall. Although the proportion of stocks trading above 50 DMA remained below the median threshold, there was noticeable recovery compared to previous weeks.
- The recovery for stocks above 200 DMA showed improving signs in the market, reducing the likelihood of further structural damage to the downside.
- While momentum in market breadth saw a substantial recovery, further improvement in quarterly numbers is needed to ensure healthy stock participation overall. This suggests that we are still not completely out of the woods.
- Looking ahead to the new week, a retracement or consolidation could precede a more meaningful upward movement.
- The market seems to be transitioning from a no-money to a hard-money environment.
- Therefore, Nifty’s performance before reaching 50 DMA will be crucial, making the zone of 24550-24665 an important resistance level to monitor.
- The index is expected to gain additional bullish strength if it decisively reclaims this zone. On the other hand, the zone of 23650-23260 will serve as a critical support level.
- The current market swing confidence is measured at 75, indicating that portfolios may sustain less than the maximum permissible open risk. This suggests that deployed portfolios should maintain their positions.
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