MARKET OUTLOOK FOR WEDNESDAY, MARCH 15, 2017
In line with the broad-based expectations, the NIFTY
achieved a comprehensive breakout today while it ended the day with a robust
gain of 152.45 points or 1.71%. Very much on expected line, the benchmark
NIFTY50 saw a gap up opening and spent the entire session trading absolutely in
sideways trajectory while ending the day near its opening levels. There are
several factors that we now need to take into account. NIFTY has given a
breakout and today, we expect a positive opening and therefore the uptrend to
continue. On the other hand, though there is a breakaway gap with much higher
volumes confirming the bullish continuation, the NIFTY is once again over-bought
on the Daily Charts and therefore some profit taking at higher levels in form
of ranged consolidation can also be expected. This increases the chances of
some amount of throw back as well while keeping the overall up trend intact.
Also, the near-imminent hike the US Interest Rates will also have its faint
shadow on the Markets though NIFTY is all set to put up a resilient face
against this and has nearly discounted the impending hike.
For today, the levels of 9145 and 9220 will act as immediate
resistance levels for the Markets. The supports come in at 9060 and 8985
levels.
The Relative Strength Index – RSI on the Daily Chart is
74.0176 and it now trades in overbought territory. The NIFTY has set a fresh
14-day high while RSI has not and this has caused Bearish Divergence on the
Daily Charts. The Daily MACD is still yet to report any positive crossover and
is currently bearish trading below its signal line. On the Candles, a very
significant formation of A Rising Window has occurred. This is a gap and
with this occurring with heavy volumes, it may cause the upward trend to continue.
The NIFTY March futures have added over 18.43 lakh shares or
7.89% in Open Interest. This too is a strong indicator of continuing buoyant
uptrend in NIFTY in coming days.
Coming to pattern analysis, the NIFTY tested its all
important Double Top resistance previous month and since then created a
important congestion area while continuing to see range-bound consolidation. It
has reported a clear breakaway gap on the upside and this clearly implies the
upward momentum to continue. The NIFTY closed
above the upper Bollinger Band by over 12.20% with the prices breaking the
upper band and confirmed upside breakout is possible.
All and all, the visual inspection of the patterns on the
Charts, a clear breakaway gap on the upside and the F&O data all
collectively point towards continuation of the uptrend in coming days. However,
the only factor that would raise caution is the nearly-discounted US Fed decision
that is coming up later tonight and the overbought nature of the Markets. This
may cause some throw-back to occur on the Daily Charts. Apart from this,
sectoral and stock-specific rotation will remain visible. While guarding
profits at higher levels vigilantly, positive outlook is advised for today.
(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
