Dalal Street Weak Ahead: Nifty stands on firmer footing, but can it break past 23,450?

The Nifty's ability to defend this level on a sustained basis will be crucial in determining whether the present recovery develops into a more meaningful upward move. Conversely, a renewed breach of this average would weaken the recovery attempt and leave the Index exposed to further downside pressure.

The weekly RSI stands at 43.29; it stays neutral and does not show any divergence against the price. The weekly MACD remains bearish and trades below its signal line. A big white candle at the 200-week MA reinforces the credibility of this support point.

In the coming week, market participants should approach the markets with cautious optimism but avoid adopting an aggressively bullish stance. The recovery above the 200-week MA is encouraging, but the absence of stronger momentum confirmation warrants a measured approach. Fresh buying should remain selective. It would also be prudent to protect gains after sharp rebounds instead of chasing prices at higher levels. A stockspecific approach, disciplined risk management, and close monitoring of the Nifty's behavior around its 200-week MA should remain the central strategy for the coming week.

In our look at Relative Rotation Graphs, we compared various sectors against the CNX500 (NIFTY 500 Index), representing over 95% of the free-float market cap of allthe listed stocks.

The Relative Rotation Graph (RRG) shows a distinct change of leadership in the markets.The Nifty Sector Index has rolled inside the leading quadrant. The Nifty Bank, Media, Pharma, and IT Indices are inside the leading quadrant as well. These groups are likely to relatively outperform the benchmark.

The Metal Index has sharply rolled back inside the weakening quadrant. The Realty, Midcap100, and the Auto sector Indices are also inside the weakening quadrant.

Only Nifty FMCG and Energy Sector Indices are inside the lagging quadrant. However, both of these are seeing a sharp improvement in their relative momentum against the broader markets.

The Nifty Infrastructure Index has rolled inside the improving quadrant. The PSE, PSU Bank, and the Financial Services Indices are also inside this quadrant. They may see an overall improvement in their momentum against the broader Nifty 500 Index.

Important Note: RRG™chartsshow the relative strength and momentum of a group ofstocks. In the above Chart, they show relative performance against the NIFTY500 Index (Broader Markets) and should not be used directly as buy or sell signals.