Monday, February 5, 2018



The session on  Friday following the Union Budget remained quite ugly as the Markets refused to digest proposals like LTCG coming in while STT not going away. Taking shelter under such reasons, the Markets, which were anyway showing signs of fatigue over last couple of days took a deep cut as the benchmark NIFTY ended the day with net loss of 256.30 points or 2.33%. The broader Indices took even deeper cuts losing anywhere between 4% to 10%. Going into trade on Monday, we expect a modestly negative and volatile start to the trade. There has been global corrective mood in the Equities and this may affect Indian Markets as well over and above the domestic reasons.
However, having said this, we expect that a percentage here or there, we may see NIFTY attempting a temporary formation of base anytime soon. The levels of 10830 and 10880 might act as resistance on the way up, supports exist a 10700 and 10645 zones.
The Relative Strength Index – RSI on the Daily Chart is 48.3699 and it has formed a fresh 14-period low which is bearish. Also, a bearish divergence is seen as the RSI has formed a fresh 14-period low while the  NIFTY has not yet. Daily MACD has reported a negative  crossover and it is now bearish trading below its signal line. A big black candle that has emerged gives credibility to the resistance area of 11000-11170 zones.
Pattern analysis shows that NIFTY as taken a sharp breather and has formed a temporary top in the 11000-11170 zones. It has also slipped below its short 20-DMA and might take some time to form a base and consolidate to resume its up move.
All in all, there might be some short term turbulence that might persist in the Markets. However, downsides should get arrested from one or one and half  percentage point from current levels. While this happens and Markets prepares to move up again, a tactical shift is expected to sectors like Infra, select pack of Auto, Media etc. Lot of portfolio churning is expected and we will see distinct out performance in select stocks. With Markets dominantly above its 50, 100 and 200-DMA, there is no reversal of trend. This is a disruption in primary trend and dips should be used to make portfolio purchases.
Milan Vaishnav, CMT, MSTA
Technical Analyst
(Research Analyst, SEBI Reg. No. INH000003341)
CMT Association (Formerly known as Market Technicians Association, (MTA), USA
Canadian Society of Technical Analysts, (CSTA), CANADA
Society of Technical Analysts (STA), UK

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