Gemstone Equity Research & Advisory Services

Wednesday, July 19, 2017

MARKET OUTLOOK FOR WEDNESDAY, JULY 19, 2017

MARKET OUTLOOK FOR WEDNESDAY, JULY 19, 2017

We had categorically mentioned in our yesterday’s note that given the overbought nature of the Markets, they remain prone to sharp corrective bout. Exactly on these lines, the benchmark NIFTY50 saw a sharp corrective bout that started with a gap down opening. It finally ended the day with net loss of 88.80 points or 0.90%. On Wednesday, we expect a tepid start and the Tuesday’s low of 9790 will be critical levels to watch out for as they happen to be a pattern support for the Markets.

Wednesday will see the levels of 9650 and 9685 as important resistance levels. Supports will come in at 9790 and 9730 zones.

The Relative Strength Index – RSI on the Daily Chart is 64.0676. It has just crossed below from a topping formation. Daily MACD still remains bearish while trading below its signal line. A falling window occurred. This is essentially like a gap formation and this usually results into continuation of the downward trend.

The pattern analysis show that after NIFTY successfully moved past the rising trend line once again, on the downside, it has taken support on this trend line. The level of 9790 happens to be this pattern support and this level needs to be critically watched for.

All and all, despite some tepid start that is expected, Markets will be in for a longer corrective pressure if the levels of 9790-9770 are breached. We also expect some volatility to persist as well in the Markets. We recommend remaining very light on the overall exposures and refrain from taking over leveraged positions in the Markets.

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

Tuesday, July 18, 2017

MARKET OUTLOOK FOR TUESDAY, JULY 18, 2017

MARKET OUTLOOK FOR TUESDAY, JULY 18, 2017

Markets continued to inch upward on Monday as the NIFTY ended yet another day with modest gains of 29.60 points or 0.30%. Markets participants continued to chase momentum and the Markets maintained its specified levels on the Charts. On Tuesday, we expect a modestly positive start and we will see Market participants continuing to chase momentum. While this happens, it is high time that such chase of momentum should be accompanied with great amount of caution. The reason behind this is that the NIFTY stands overbought on both Daily and Weekly Charts and this warrants our attention.

Tuesday will see the levels of 9930 and 9975 acting as immediate resistance levels. Supports will come in lower at 9860 and 9820 zones.

The Relative Strength Index – RSI on the Daily Chart is 76.8977. This is bullish as RSI has market a fresh 14-period high but at the same time, we cannot ignore the fact that it trades overbought. The Daily MACD too stays bullish while trading above its signal line.

Pattern analysis shows the Markets continuing with its uptrend after moving past the rising trend line drawn from 9200 zones. In event of any consolidation, this trend line is expected to act as support.

All and all, frenzied chase of momentum is likely to continue to keep Markets buoyant; we need to exercise extreme levels of caution while approaching the Markets. Given the overbought nature of the Markets from every angle, some sharp corrective move or a chance of the Markets getting into consolidation mode cannot be ruled out. Every up move will make the Markets vulnerable to sharp corrective bouts. A cautious approach with great caution is advised for the day.