Nifty This Week: Technical Charts And More – Stock-Specific Moves Lie Ahead

A trader monitors financial data, on computer screens. (Photographer: Chris Ratcliffe/Bloomberg)

Nifty This Week: Technical Charts And More – Stock-Specific Moves Lie Ahead


We all wish this darned market would make up its mind. In the last week, we had our fingers crossed for an upside thrust above 15,000. Why fingers crossed? This is what I had written, “This (the breakout) is not going to happen with a single session of robustness. We may probably have to wait for several days for everything to fall in place.” I had also talked about the sluggish nature of the momentum indicators. Well, the fact is that the Nifty made a dash on Monday, helped by a strong gap at the start. One would have thought that ought to have been enough. But no, the market remained unimpressed. Said, I am not going higher. It tapped past the 15,000 mark just briefly and then decided to give up the attempt.

Hugely disappointing, no doubt, for those that were waiting. Well, in this market one thing is becoming clear – don’t hold your breath for the breakout. It ain’t coming, for now, folks.

So everyone did an about-turn and said Oh, ok. Let’s see if the lows being taken out then. And some analysis jumped out of the intraday charts. ‘Island Reversal’ screamed some. It indeed was – not a pattern you get to see often. When it comes at the top of an advance it is a nasty piece of work. Here, take a look at it in this chart.

Nifty This Week: Technical Charts And More – Stock-Specific Moves Lie Ahead

It was well on its way to do its dirty work (i.e. return to the point of origin) and would have achieved its nefarious designs too, had not the market spoilt the game for the bears by having an ill-timed holiday on Thursday! Pop went the bear’s balloon and when the market opened on Friday, it was to their great discomfiture! Many of them, most certainly, felt cheated out of a couple of hundred points! But this holiday left the bulls heaving a huge sigh of relief!

Now, all that is fine for the intraday stuff and for the traders. But what about the rest – who don’t watch markets with such a beady eye? For them, it was the same boring stuff. Even though the weekly range was about 400-points, these days it seems to be par for the course. The whole of May range is around 540-points so far. And it is still trading within the ranges of the last three months.

Do you recall the stuff I wrote two weeks ago, about quarterly ranges? Here is something from that article, “May has seldom been a negative month. While that may be comforting, it cannot create a trend. With the ‘game over’ notice up on the screen as of this week, I feel we may be set for some grinding once again. We shall once again go through that 300-500 point range.”

Looks like that game over notice was hung out this week too!

So, I am not really surprised that the index is making heavy weather of it right now. Maybe it is going to continue to do so.

Speaking from a slightly longer perspective, so long as the 14,500 area is not violently lost, there shouldn’t be a problem.

But for those following the shorter term, the frequent turns and oscillations are really getting to be tiring too. Here is the monthly chart up close. Note the upper shadow candles (evidence of selling) but failing to create much down-draft (lower shadows seen) resulting in some hesitancy (small body candles). Go figure!

Nifty This Week: Technical Charts And More – Stock-Specific Moves Lie Ahead

No disturbances are seen in the sector indices so the market is either doing well or churning in other areas too. Notably, no weakness is seen in small and midcap space. So retail is alive and thriving! Last week, I read that the retail participation now in the market volumes has grown to be 45%. Wow, this means they are the top dogs now! FIIs were at 11% compared to DIIs at some lowly 7%. So retail is really cranking it up.

The problem here is that retail cannot get together to produce a trend.

At best it can further trends that are already in progress or set in motion by institutions and operators. So, as and when the latter get into action, we can expect a good amount of action. It is quite certain that the retail segment is already well-stocked with long positions. Therefore, the blade can cut the other way too. If there is some adverse development and the movers of the market get into the sell side, then there could be a scramble for the exit door by retail and that certainly can turn ugly very quickly. This is something to remember.

So, ho-hum. Nothing much changed except for some random noise. But even in that, much money was made and lost in individual stocks. Results flow has been decent so far. That seems to be the best area to prospect in this market – look where the market is willing to reward good numbers. Such stocks are giving some outsized move, whether justified or not is another question. An example of that would be the sharp surge in a stock like Godrej Consumer Products where an appointment of a new CEO added so much additional fuel to what looked like a pretty normal set of numbers. Strange indeed are the ways of the market.

Stock specific it is for the weeks ahead.

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