retail research weekly technical outlook · 2020-05-23 · retail research, weekly technical...

Retail Research

Weekly Technical Outlook

A Chart BookOn

Benchmark, Sectoral & Global Indices

23rd May 2020

Retail Research, Weekly Technical Outlook

Markets Trading in Narrow Range with Negative Bias; Below 8950 Support, Nifty could slide to 8700 and 8420; Resistance 9300

MACD Below Zero Line

Bearish Island ReversalResistance : 9300

Support 8950, 8700 & 8420

Bearish DMI

Bearish Island Reversal

Nifty500 Daily Chart :7416

Fresh Breakdown Below 7350

Bearish DMI

RSI forming Lower Tops

Nifty Daily Chart : 9039

Resistance 7600-7650Supports 7350, 7234,& 6850

MACD Below Zero Line

RSI Forming Lower Tops

Fresh Breakdown Below 8950 Support

Resistance9300

Resistance7620

Technical Observations


• In the First session of the Last week, Nifty plunged more than 3.4% and hit a low at 8806. This Fall was followed by the gradualrecovery throughout the week, which took the Nifty to close at 9039 with net weekly loss of 1.07%. BankNifty nose-dived more than8.25% and underperformed Nifty by huge margin. Financial Sector remained under pressure as Nifty Private Bank, PSU Bank andFinancial Services indices plunged 8.66%, 8.09% and 6.89% respectively. Nifty Pharma, IT and FMCG indices outperformed themarkets by soaring 5.58%, 4.90% and 3.07% respectively.

• Nifty continued to face resistance at its 50 DMA through out the week. At present 50 DMA is placed at 9067. Nifty has been failingto close above its 50 DMA since it developed bearish Island Reversal on 4th May 2020 on the daily charts. 8 days EMA has beensustaining below 21 days EMA, which confirms down-trend in the short term.

• Nifty and Nifty 500 indices have been developing similar pattern on the short term charts. Both indices have got strong resistanceof the downward sloping trend line, which adjoins the previous tops on the daily charts. For Nifty, trend line resistance is placed at9300 odd levels, while for Nifty 500 the it is placed at 7620 odd levels. Unless and until, these Indices surpasses the trend lineresistance on sustainable basis, we should remain cautious in the markets

• Last week, in 3 out 5 trading session, Nifty found support on the upward sloping trend line, which adjoins the low of 24th March2020(7511) and 18th May 2020(8806). Any level below 8950 would violate this trend line support, which could result in to freshmomentum selling in the Nifty. Nifty500 Index too have similar trend line support placed at 7350. Sustainable level below 8950could drag Nifty towards 8700 and 8420 levels, which happens to be 50% and 61.8% retracement of the entire up move seen from7511 to 9889. Indicators and Oscillators have also been si weakness in the overall markets.

• To conclude, We believe that Markets are range bound with negative bias. Overall range is between 8950 and 9300. Itwould be advisable to cut longs if Nifty breaks 8950 support. Below 8950, Nifty could move down to 8700 and 8420levels. Banks and NBFC are expected to continue their underperformance. Pharma, IT and FMCG sectors are likely tocontinue with the outperformance. If Nifty were to close above 9300, then it would result in to bullish breakout.


Sectoral View: FMCG, Auto & Banks

Nifty FMCG Index: One of the Outperformer

FMCG Index is one of the outperformer after Pharma and ITsectors. Index rose more than 3% in the week. Stock has surpassedthe resistance of its 50 days EMA

Index took support on the 50% retracement of the entire upswingseen from the bottom of 19th March to the top of 17th April 2020.

Index has also closed above the downward sloping trendline onthe daily charts.

Stocks with Positive bias are Britannia, Marico, Tataconsumer,Jublfood and ITC.

Nifty Auto Index: Strong till it holds above 5420

Auto is the Sector, which has been doing relatively good if wewere to compare it with other high beta sectoral indices.

8 days EMA has been sustaining above 21 days EMA

Index has also closed above its 50 days EMA

Index is likely to reverse the trend towards down once it breaks5410 Support. Level around 6000 can act as a resistance

Stocks with Positive bias are M&M, Heromotocorp and Maruti.

Nifty Bank: Bounce expected – Sell on rise

The Bank index has breached the neckline of Head andshoulder pattern at 18300 level.

RSI (14) is now trading below the 40 level suggesting bearishrang shift. Also, index is tagging the Lower band of Bollingerband which indicates that index could correct in the near term

Support for the next week is at 16800 and Resistance isplaced at 18300.

Stocks with negative bias are Axis Bank, Federal bank, Bank ofBaroda and State Bank of India

NSE Metal Weekly Chart NSE Auto Daily Chart

Disclaimer: Please Check with your RM/Analyst beforehand for Entry, Target and Stoploss levels in case you wish to act on any of the above recommendation.

NSE Bank Daily ChartNSE FMCG Daily Chart


Sectoral View: Pharma, Reality & IT

NSE Pharma: Bullish Momentum

The Pharma index has started the next rally.

It has witnessed a new breakout.

Hence one can maintain positive bias from CMP and add in thedips below 9400.

Supports are placed at 9400 – 9300 while resistance are placed at9750 – 9850.

Stocks with Positive Bias are Lupin, Sunpharma, Cadila Healthcare& Dr Reddy.

NSE Reality : Continuation of weakness

The Realty sector has taken a breather after a sharp correctionand now it is drifting lower.

Index started to slide down from the resistance.

It is in the attempt to make lower low.

Supports are placed at 160 and 156, while resistances are placedat 168.50 and 172.60.

Stocks with Negative Bias are Godrej Property, IB Real estate, DLF& NCC.

NSE IT : Likely to Outperform if hold above 13500 level

After taking support on upward slopping trend line Nifty ITIndex moved higher by making higher top higher bottomformation, which is a bullish indication. Index is also tradingabove 21 days EMA.

If Nifty IT index holds above 13500 level then traders may seeIndex heading towards it’s intermediate high 14200 by fillingdown gap.

Support is placed at 13500 level and resistance is at 14200followed by 14600 levels (61.8% retracement)

Stocks with Positive Bias are TCS and INFY.

NSE Pharma Daily Chart NSE Reality Daily Chart

NSE IT Daily Chart

Disclaimer: Please Check with your RM/Analyst beforehand for Entry, Target and Stoploss levels in case you wish to act on any of the above recommendations.


Global Market Trend : US Markets likely to OutperformAsian Markets like Shanghai, HangSeng and Seoul looks Weak

S&P500 Index Daily Chart: 2955Higher Tops and Higher Bottoms, 200 DEMA Resistance Surpassed

Shanghai Daily Chart: 2814Trendline Breakdown

Reversal from 200 DEMA Resistance

Seoul Composite Daily Chart :1970Bearish Reversal from 200 DEMA

Hang Seng Daily Chart : 22930Horizontal Channel Breakdown

Expected Move: Up

Expected Move: Down

Expected Move: Down

Expected Move: Down

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retail research weekly technical outlook · 2020-05-23 · retail research, weekly technical...

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