Stockology: the week ahead is well balanced, with a slight advantage for sellers

Technical analysts can capitalize on the transit by focusing on tools such as MACD, effectively identifying overbought stocks ripe for correction. While there may be some buy-side trades, they typically span a short to medium-term outlook of 1 to 4 months.

Stockology is a weekly column by futurologist Mahesh Gowande. He is the Founder and Director of Ayan Analytics, which has developed ZodiacAnalyst, a research software with time and price charting tools.

Read previous columns here

Review

The nervous markets moved as expected, with the Nifty declining 420 points during the week. We believe this could be the beginning of a high-volatility phase over the next three months. The auto  and FMCG sectors saw strong traction during the week, while  banking and IT  got hammered as deep-pocketed investors exited.

Technical
Our system is suggesting that the NIfty shedding 420 points  could be the beginning of a long correction.  We have seen traders using momentum indicators and systematic trading lose a lot of money at such times.

The weekly charts have given a closing below that of the previous 11 weeks, making it the first sign of probable reversal of the markets. The delivery volume was more than  normal, which means the money will go out of the system. Technically, hourly signals were in the extreme oversold zone, but the bounce was very weak, and it failed to touch or cross 50 percent of Thursday's candle. If Thursday's low of 21,932 is breached, then expect a further fall, with a target of 21,670 within 45 days.

Also read: Dalal Street Week Ahead: India & US inflation, ECB financial stability review among 10 things in focus

On April 25th, the planet Venus moved from Pisces to Aries. We suggested that one should be more careful about one's  investments. Since then, investor wealth has  slowly been diminishing.

Time map

The Sun entered nakshatra Kruttika at 7:02 AM on April 11th, marking the onset of its influence. During the Kruttika period, the divergence indicator is the most effective technical tool to use on both the weekly and hourly charts.

Nakshatra Kruttika symbolises a need for cautious consideration before acting, suggesting a prudent approach. Expect sharp and steep price movements, with spike candles becoming more frequent on the charts. Market sentiment-driven actions, fuelled by frustration, greed, and over-excitement, are likely to disrupt chart patterns.

The week ahead is well balanced, where the  sellers have a slight advantage. The auto, FMCG, and pharma sectors  will see price recovery in many stocks. Though there may be increased volatility, still, the markets should see a nominally negative weekly closing, while  FMCG, pharma and auto stocks can see  positive price movements.

SUN 0 URANUS on 13th will trigger a big movement in power sector stocks, especially of the  sector leaders. We also see a positive influence on the IT sector.

VENUS 60 SATURN is positive, will stabilise the media sector and give a big boost to the FMCG sector.

Mercury 90 Pluto signifies wealth destruction due to natural calamity, or human violence and loss of livestock.

Weekly forecast for traders and SIP investors

May 13, 2024: Monday: S.6: Punervasu 11.34/Pushya: auspicious day

A lower opening will be considered a very positive signal for the markets (exactly the reverse of last week). Tithi 6 will ensure a nice pullback  in the markets, we'll see spike bottoms, and hourly divergence will throw up `Buy' opportunities for swing traders. Nifty FMCG and Nifty Equal 50 could indicate the best ETF SIP and also bulk investment plays. Sector leading ETFs  can be  added to the portfolio.

The nakshatra change time will play an important role. We may witness aggression in buying after 1:30 pm, with stock prices  going up. SIP investment highly recommended today, and also BTST (Buy today, sell tomorrow) positions.

May 14, 2024: Tuesday: S.7: Pushya-13.05/Ashlesha: bullish day

The market sentiment will be very positive. Metals,  mining, and natural resource-related companies would see demand and volatility. Nakshatra Ashlesha provides directional momentum.  Aggressive consolidation breakout signals would give the best results. Stick to trend-following indicators. It would be best to ride the momentum, albeit slightly behind. Strictly avoid contrarian or reversal trades after nakshatra change during the day. Long and short basket positions are recommended.

May 15, 2024: Wednesday: S.8: Ashlesha: rangebound, volatile

After the initial opening activity, markets should remain rangebound and boring through the day. Which may make market participants nervous.

Tithi 8: we will see negative price movement in PSUs, and positive movement in capital goods, especially cement, real estate, and also home décor stocks. The short-term, 15-minute chart will indicate reversion and throw up intraday basket trades. Go for BTST.

May 16, 2024: Thursday: S.8-6.23/S.9: Magha: bullish, sell short

Tithi Navami: the  first half is bullish, so  till 12 noon is good for buy trades, and post 1 pm  look for sell patterns on the 15-minute charts. It's the best day of the week, both buyers and sellers can make a lot of money.

May 17, 2024: Friday: S.9 8.49/S.10: Purva: book profits

Tough day to make money, misleading signals on the swing charts will hurt system traders, and delayed, or after 2nd confirmation, participation will give better results.

Mercury 90: today, Pluto will hurt largecaps, and companies in a particular region could witness losses due to a natural calamity .

Panic selling cannot be ruled out, so ensure that stops are punched into the system.

Our observations of Nakshatra ‘Kruttika’– May 11th to May 25th

This is the third nakshatra.

The symbol is the knife or spear.

The deity is Agni, the god of fire.

The planet lord is the Sun.

The position in the Zodiac is Sign Aries, 13.21 to 26.40 degrees.

When the Sun transits through its own Nakshatra, Kruttika, we have powerful outcomes. In the stock markets, this period may offer opportunities for short-selling manipulated stocks.

Technical analysts can capitalise by focusing on tools such as MACD, effectively identifying overbought stocks ripe for correction. There may be some buy-side trades  over one to four months.

Kruttika's attribute of instigating separation or divergence from existing trends presents a negative signal. Industries most affected during this period includes  explosives, chemicals, military vehicles, international trade, and mining.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.