Market Technicals: A Week Best Left Behind
A driver is reflected in the rear-view mirror of a car. (Photographer: Brent Lewin/Bloomberg)

Market Technicals: A Week Best Left Behind


Other than starting with a gap, the Nifty 50 really did nothing more in the last week. It was something like the hare and the tortoise story where the hare ran so far and so fast that it thought it could take some nice rest before the latter caught up. We all know how the rest of that story turned out and hope that won’t be how the markets will unfold ahead!

The situation in the last couple of weeks has caused the support trendline on the weekly charts to be revised upward a wee bit. That trendline still leaves us a comfortable distance away implying that the major turns in the trend are far away.

Market Technicals: A Week Best Left Behind

But problem is, if you told someone now that the change point is far away at 13,875, they will probably look at you as though you lost it or something! These are the days of fast moves, my friend, you will probably get told. Who can wait for a 1,200-plus kind of drop to know that things have changed? Well, I got news for you, buddy. What you like or want is rarely, if ever, what the market likes or wants. So, if you cannot stomach a large drop and still be able to hold positions, then you better take another train which is labeled ‘short-term train’.

Here you will get some better deal. A support trendline at 14,050 and a price gap area at 14,350-14,525. Now, that ought to sound better to some folk but there will still be many out there going, ‘OMG 700 points, you got to be out of your mind’.

Market Technicals: A Week Best Left Behind

Since we are looking to have an answer for all types of folks here, we have some more updated figures for them on the ‘very short-term train’.

Market Technicals: A Week Best Left Behind

Here you have the final zoom-in. A support at the latest gap zone at 14,490-15,025. The earlier shown gap zone also features in this chart. So that is the bigger zone to aim for if you are into shorting this market. Such people could also try stuff like bungee jumping or Russian Roulette in my opinion! Great for a thrill but not much more, perhaps. But in and around 15,000 is the best we can do for the bulls for now. Below that, it is Hobson’s Choice, I am afraid.

Bulls have been forced a bit to the sidelines in the week it appears. They have been trying to push the Nifty higher but have taken a knock almost every day of the week. That is enough to dishearten the hardiest. The market is such an endurance game if you are into trading. So it is now safer to simply wait for a breakout to new highs past 15,250 before committing to a buy. Till then, if you are a trading junkie variety you could always attempt range trading by fading the bounds of last week’s range!

So not much to say further on a week where you did nothing much but pretended to be the hare!

What about the broader market? Pharma took a knock. Metals slid a bit. FMCG was thumped a bit, Media was a no-show, PSU banks slid bit, private banks were slightly better as were other financials. A mixed bag for the futures in these sectors – where most trade. But small and midcap indices were better placed so retail punters in the cash group may be happy-chappies after all in this market too. But crude oil edges higher and could become a cause for worry if it keeps up.

What about global indicators? The Dow did well, the dollar is vacillating, although pressured, the 10-year yield is still upwardly poised, gold is struggling to retain its current range so interest seems to be shifting to the base metals where good trends are visible. So pretty much a bit mixed over the rest of the globe too.

Hence best to write off this week as being just one of those! If you made money in it, enjoy. If you didn’t, chill. If you lost money, don’t lose your composure.

Let’s all gird up for the next week and the rest of the month.

CK Narayan is an expert in technical analysis; founder of Growth Avenues, Chartadvise and NeoTrader; and chief investment officer of Plus Delta Portfolios.

The views expressed here are those of the author, and do not necessarily represent the views of BloombergQuint or its editorial team.

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