All throughout the week, Nifty staying above the previous high point of 15,431 will be extremely crucial. If that does not happen, then the high point of 15,469 will just remain an incremental high and no breakout shall occur.
Chase any Nifty bounce with caution now; Metals, Pharma, FMCG look better placed
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Chase any Nifty bounce with caution now; Metals, Pharma, FMCG look better placedBy Milan Vaishnav, CMT, MSTA, ET CONTRIBUTORS
Last Updated: May 22, 2021, 12:27 PM IST
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Synopsis
The headline index closed with net gains of 497 points (+3.39%) on a weekly basis to finish on a broadly strong note.
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Nifty PSE Index has slipped inside the weakening quadrant.
Despite intermittent hiccups, the week gone by turned out to be much better than expected for the Indian market. Nifty not only averted the bearish consequences for the violating the Rising Trend Line, but also went on to end the week with decent gains. Compared with the previous week, this time Nifty traded in a wider range, oscillating in a 465-point band, mostly with a bullish bias. In between, it saw two days of consolidation and throwback.
Dalal Street Week Ahead: Nifty behaviour against Falling Channel chart tells you to stay defensive
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The 15,000 level remains a sacrosanct resistance point, one lower than that exists at 14,800 level. As long as the 14,800-15,000 range is not taken out convincingly, Nifty will face selling pressure at higher levels on every bounce.
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Defensive stocks from IT, pharma, FMCG and consumption sectors are gaining strength relatively and this phenomenon is likely to persist in the coming week as well.
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The truncated trading week gone by turned out to be a disappointing one in ways more than one. When it had appeared that Nifty had rectified the violation of its immediate and important trend line supports, it violated it again and took support in the short-term 20-week moving average.
In a technically important week, the equity market pulled up from the lows hit in the previous two weeks. Nifty saw a narrower trading range than the week before. The index oscillated in a 446-point range over the past five session and kept on trending on the upside.
Except for some intermittent hiccups, the market broadly edged higher. While continuing to stay within the Falling Channel and following a relatively quiet and less volatile week, the headline index ended with a net gain of 192 points, or 1.31 per cent, on a weekly basis.
Over the past sessions, Nifty violated some important rising trend line supports; this trend line was drawn from the lows of March 2020, which joined the subsequent higher bottoms. However, the price action over the past couple of days has led the index to move above this trend line again. From a technical perspective, this would be important; if Nifty stays above this rising trend line, then we may see it test the upper edge of the Falling Channel.
Nifty is likely to start the coming week on a soft note and the 14,730 and 14,900 levels are likely to act as key resistance, while the 14,500 and 14,350 levels are likely to offer supports.