MARKET OUTLOOK FOR WEDNESDAY, FEB 07, 2018

MARKET OUTLOOK FOR WEDNESDAY, FEB 07, 2018

Markets had a much worse-than-expected and dismal start to the trade on Tuesday. The opening was a big gap down following a overnight rout in the equity markets that had started from US. The opening of NIFTY was much in line with the Asian peers which were trading 3% to 4% lower. However, post such weak opening, Indian Markets grossly out-performed on relative basis with the Asian peers as it recovered nearly 200-points from the low point of the day. The NIFTY validated 100-DMA as its support and it has formed potential base in the 10250-10300 zone.

Going into trade on Wednesday, we can still expect some modest negativity in the initial trade. However, the levels of 10450 and 10375 will play out as major support unless some drastically goes wrong with the global markets overnight. On the higher sides, Markets may find resistance at 10545 and 10610 zones.

The Relative Strength Index –RSI on the Daily Chart is 35.8479 and it has marked a fresh 14-period low which is bearish. The Daily MACD is bearish while trading below its signal line. On Candles, a big white body has occurred. In the present circumstance, it has occurred near the 100-DMA area and therefore, it has marked 100-DMA as a potentially strong bottom for the NIFTY

Pattern analysis show that Markets have returned majority of its gains that it achieved after breaking out from 10200-mark.

It is also important to observe that present weakness in equities is global in nature and has nothing to do with any domestic reasons. Because of this, such global corrections remain short term in nature. In past, whenever there have been such synchronized global correction, they have remained very short lived. While they last, the domestic markets have typically decoupled themselves while attempting to out-perform the peers on relative basis.

Overall, though a likely base has been formed, we may not find the Markets showing a sharp one way relief rally. We expect some volatility to persist and some oscillations to happen before a definite base has been formed. All this is presuming there is no overnight continuation of any major weakness in the global markets. At this juncture, we would like to reiterate that this is nothing but a bull market correction and the primary uptrend still remain in place. We strongly recommend utilizing all such opportunity to make portfolio purchases. Traders are advised to preserve cash and also make some modest selective purchases at lower levels.

Milan Vaishnav, CMT, MSTA
Technical Analyst
(Research Analyst, SEBI Reg. No. INH000003341)

Member: 
CMT Association (Formerly known as Market Technicians Association, (MTA), USA
Canadian Society of Technical Analysts, (CSTA), CANADA
Society of Technical Analysts (STA), UK 
www.EquityResearch.asia
http://milan-vaishnav.blogspot.com

+91- 70164-32277  /  +91-98250-16331  
milan.vaishnav@equityresearch.asia
milanvaishnav@yahoo.com