Saturday, 27 May 2017

Sensex week ahead: Market turning overbought, rangebound play ahead

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In our previous weekly note, we had said that rollover-centric activities would dominate market proceedings. There was accumulation of shorts in the market and it had a stronger-than-expected effect on the indices.

The benchmark Nifty50, which was net negative for the week, turned the tables, and ended this week with net gains of 167 points or 1.77 per cent on a weekly basis. Though the market remained strong, the coming week will see some of the momentum tapering off and the market taking a breather.

The art will be in spotting stock-specific action to extract gains as the market may take some breather without losing any significant ground.

The Relative Strength Index or RSI on the weekly chart stood at 75.8654. Though it trades in the overbought zone, it has marked a fresh 14-period high and it is a bullish indication. The weekly MACD trades above its signal line and it is a bullish signal as well.

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