Weekly Market Outlook for 12 February to 16 February

In the week gone by, Nifty had consolidated within a narrow range but there was no lack of stock specific momentum. The heavy weights from sectors such as PSU Banks, Oil & Gas and Pharma outperformed while Private Banks and FMCG stocks underperformed to drag the markets lower. Nifty was unable to sustain above the 22000 mark and it ended the week below 21800 with a weekly loss of one-third of a percent.

Nifty Today:

Nifty has been consolidating in a range since last few days and if we look at the chart structure, then recently the index had formed a bearish ‘Shooting Star’ candle on the daily chart and the recent high around 22127 also resembles a ‘Double Top’. The index has not yet negated the pattern which is a sign to be cautious for the near term. Also, the FIIs have formed short positions in the index futures segment with around 67 percent of the positions on the short side and have sold equities in the cash segment. This combination of selling in cash segment and short formations in the index futures by them generally leads to corrective phases.

Now, above analysis (technical and derivatives data) does not seem much bullish and thus our markets could go through either a time-wise corrective phase (consolidation) or a price-wise corrective phase. The 20 DEMA support is placed around 21680 which would be seen as a crucial support on closing basis. A close below this support could result into a correction towards 21450-21400 zone. On the higher side, the index needs to surpass the recent swing high of 22127 to negate the reversal pattern formed which would then result into a continuation of the uptrend.

                                        Nifty consolidates in a range; PSU Banks bucking the trend

Traders are advised to stay cautious and avoid aggressive longs at current levels until we see a breakout beyond the above mentioned range. Trading on stock specific momentum could be a better approach at current juncture.

Nifty, Bank Nifty Levels and  FINNIFTY Levels: