Gemstone Equity Research & Advisory Services

Monday, June 19, 2017

MARKET OUTLOOK FOR MONDAY, JUNE 19, 2017

MARKET OUTLOOK FOR MONDAY, JUNE 19, 2017

Much on the expected lines, the zones of 9575-9600 continue to act as stiff resistance to the Markets as the benchmark NIFTY50 moved in an extremely narrow range to end the day a minor gain of 10 points or 0.10%. For Monday as well, the behavior of the Markets vis-à-vis the levels of 9575-9625 will be extremely critical to watch for. For the Markets to avoid any weakness from intensifying, it will have to manage to stay and trade above these levels.

For Monday, the levels of 9625 and 9660 will act as immediate resistance levels while supports will come in at 9575 and 9510 zones.

The Relative Strength Index – RSI on the Daily Chart is 56.0764 and it remains neutral showing no divergences against the price. The Daily MACD continues to remain bearish while trading below its signal line. On the Candles, black candle occurred on the Daily Chart. This resembles not-so-classical spinning top formation given the very small real body which often results from a very narrow difference between the opening and close levels. This behavior also demonstrates tentative approach and lack of conviction with regard to directional bias of the Markets.

The Pattern analysis continues to show the Markets ruling below the rising trend line that is drawn from 9200 levels. Having once dipped below that support, on its way up, this trend line may now act as resistance for the Markets.

All and all, in most likelihood, we expect the Markets to expand its corrective activities and continue to show declining tendencies. With every rise, it will make itself more vulnerable to selling bouts so long as it is trading below 9625. We continue to reiterate to preserve cash and continue to approach the Markets with high degree of caution.

Milan Vaishnav, CMT

Technical Analyst

(Research Analyst, SEBI Reg. No. INH000003341)

Member:

Market Technicians Association, (MTA), USA

Canadian Society of Technical Analysts, (CSTA), CANADA

www.EquityResearch.asia

http://milan-vaishnav.blogspot.com

+91-98250-16331

milan.vaishnav@equityresearch.asia

milanvaishnav@yahoo.com

WEEKLY MARKET OUTLOOK FOR JUNE 19 THRU JUN 23, 2017

WEEKLY MARKET OUTLOOK FOR JUNE 19 THRU JUN 23, 2017

Our previous Weekly note mentioned about requirement of approaching Markets with great caution. We had also expected some minor corrective action to set in as well. In line with this analysis, with very limited downsides, the benchmark NIFTY50 witnessed some corrective action and ended the Week with net loss of 80.20 points or 0.83% on the Weekly note. The coming week also is likely to see the benchmark struggling to go beyond 9600-mark. The zones of 9575-9625 will remain critical to watch for in the coming week.

While the levels of 9625 and 9710 will act as immediate resistance levels for the Markets, the levels of 9575 and 9460 will work out as supports.

The Relative Strength Index – RSI on the Weekly Charts is 72.1133. Though it is neutral showing no divergences against the price, it continues to trade in overbought territory. The Weekly MACD is bullish as it continues to trade above its signal line. No significant formations are observed on Candles.

The pattern analysis clearly portrays the breakout that occurred above the 8900-8950 levels remaining in force. Only that it is now little overstretched with lead indicators in overbought territory that it becomes a little cause of concern.

At this juncture, we wish to reiterate that with the undercurrent remaining intact, we still need to approach the Markets with good amount of caution. Unless the NIFTY moves past 9625 and beyond and stays above that, it will continue to remain vulnerable minor profit taking activity. Some stock specific out-performance will continue but over the likelihood of the Markets remaining in corrective mode while keeping its trend intact cannot be ruled out.

A study of Relative Rotation Graphs – RRG show that the coming week is likely to see the ENERGY, INFRA, CNXMID, and NIFTY Junior continuing to lag on week-on-week basis. We will continue to see sustained outperformance in relative terms in FMCG, Financial Services and Bank Nifty stocks. AUTO is likely to further strengthen its outperformance. CNXIT and PHARMA are expected to consolidate its performance.

Important Note: RRG™ charts show you the relative strength and momentum for a group of stocks. In the above Chart, they show relative performance as against NIFTY Index and should not be used directly as buy or sell signals.

(Milan Vaishnav, CMT, is Consultant Technical Analyst at Gemstone Equity Research & Advisory Services, Vadodara. He can be reached at milan.vaishnav@equityresearch.asia)