Thursday, February 2, 2017

Daily Market Trend Guide -- Thursday, February 02, 2017

MARKET OUTLOOK FOR THURSDAY, FEBRUARY 02, 2017
After the first half of the trading session remaining heavily range bound, the Markets gave an thumbs-up to the Union Budget and went on to end the day with a robust gain of 1550.10 points or 1.81%. The Budget was perceived from neutral to positive by the Markets. Some important points remained giving infra status to the affordable housing, lowering of personal income tax rate, not flirting with the Long Term Capital Gains in the financial markets, increasing allocations that would benefit housing, infrastructure, rural spending, etc. We will now need to approach Markets from a different perspective. We expect a stable opening today and there is no doubt that buoyancy will continue to persist but in the second half of the session, we will have to remain cautious as there can be some possible profit taking and also the fact that  the NIFTY50 once again trade in overbought zone. The euphoria now needs to be approached with positive caution.

For today, the levels of 8745 and 8785 will remain resistance levels for the Markets. The supports come in much lower at 8665 and 8565 levels.

The Relative Strength Index – RSI on the Daily Chart stands at 71.9273 and it shows no failure swings. It now trades in “overbought” territory and also shows Bearish Divergence as NIFTY has formed a fresh 14-day high while RSI has not. The Daily MACD stays bullish trading above its signal line. On the Candles,  a big white candle has been formed. It is important to note that NO formations like Engulfing Candles have been observed which otherwise holds possibility of halting any uptrend.

The NIFTY February futures have added over 14.13 lakh shares or 7.27% in Open Interest which is quite buoyant indication.

While having a look at pattern analysis, two things are quite evident. First, the overall trend and underlying buoyancy continue to remain absolutely intact. On the other hand, the NIFTY is tracking the upper band of the Bollinger Band. Though this shows buoyancy, the overbought nature of the Markets may cause some consolidation to occur at higher levels. Therefore, a euphoric reaction may continue to persist and the trend may remain originally intact, but some minor profit taking and shallow correction cannot be ruled out.

Overall, it would be time that one uses the up moves to protect profits in the existing investments. Some structural changes and sectoral moves will be observed and some sector rotation will remain evident. We advice not to euphorically chase the up move but instead use any available opportunity to book profits at higher levels. Consolidation is expected and this should be effectively used to make fresh select purchases.

(Milan Vaishnav, CMT, is Consultant Technical Analyst at Gemstone Equity Research & Advisory Services, Vadodara. He can be reached at milan.vaishnav@equityresearch.asia)
Milan Vaishnav, CMT 
Technical Analyst 
(Research Analyst, SEBI Reg. No. INH000003341)

Member
Market Technicians Association, (MTA), USA
Canadian Society of Technical Analysts, (CSTA), CANADA



+91-98250-16331 

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