Gemstone Equity Research & Advisory Services

Monday, December 4, 2017

MARKET OUTLOOK FOR MONDAY, DEC 04, 2017

MARKET OUTLOOK FOR MONDAY, DEC 04, 2017

The Friday’s session remained dominated with bearish undertone as the Markets extended its losses in the second half of the trade while the NIFTY closed with a net loss of 104.75 points or 1.02%. NIFTY has slipped below its 50-DMA which stand at 10183. Going into trade on Monday, the Markets are poised at a little tricky situation. We might see a very modestly positive to flat opening on Monday. Shorts are seen being added to the system. Given the fact that the 100-DMA remain in close vicinity at 10063, Markets may attempt to take a respite from the current spate of weakness. On the other hand, the levels of 10180-10200 will pose a stiff resistance on the upside.

The levels of 10165 and 10210 will act as immediate resistance levels for the Markets. The supports come in at 10060 and 9975 zones.

The Relative Strength Index – RSI on the Daily Chart is 38.0201. It has marked a fresh 14-period low which is bearish. It also shows bearish divergence as the RSI has marked fresh 14-period low while the NIFTY has not. Daily MACD stays bearish while trading below its signal line.

The pattern analysis confirms the creation of 10410 as a lower top for the Markets. It would be important to see how the Markets behave vis-à-vis the 100-DMA. In this year, the NIFTY has taken support around 100-DMA multiple number of times.

The brighter point from the Friday’s session was that the overall volumes in the Markets remained much lower than the previous session. With the addition in the Open Interest with the decline in the volumes, we can hope that the selling is fading out. This may not immediately halt the downsides but certainly, we can expect the Markets to attempt to take respite and find some immediate base. We recommend avoiding shorts and keeping overall exposures moderate while keeping a cautious view on the Markets.

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

Sunday, December 3, 2017

WEEKLY MARKET OUTLOOK FOR DEC 04 THRU DEC 08, 2017

WEEKLY MARKET OUTLOOK FOR DEC 04 THRU DEC 08, 2017

In the Week that has gone by, the Indian Equities remained weak as the benchmark Index NIFTY ended the week with net Weekly loss of 267.90 points or 2.58%. The previous week, has by far remained one of the weaker ones in the recent past. In our previous Weekly technical note, we had mentioned about the levels of 10346-10365 acting as major resistance to the Markets. We had also mentioned about the persistent bearish divergence of the lead indicators likely leading to weakness in the near term. For the coming week, given the fact that shorts have started to get built up in the system, minor pullback may be attempted but in any case, significant up move is very less likely, at least in the immediate short term.

The levels of 10210 and 10365 will act as immediate resistance levels in the coming week. The supports will come in at 10050 and 9910 zones.

The Relative Strength Index – RSI on the Weekly Chart is 56.0154 and remains neutral against the price. The Weekly MACD has reported a negative crossover and it is now bearish while trading below its signal line. A Big Black Candle that has emerged from near the 10345-10365 has established the credibility of these resistance levels.

While having a look at pattern analysis, it is evident that the 22-month long trend line has posed serious resistance to the Markets. The lead indicators, which otherwise remain neutral to the price, have continued to form lower tops while the Markets was attempting higher levels. All this cumulatively resulted into bearish divergence on the Weekly Charts.

The lead indicators usually foretell the coming price action. It was expected since couple of weeks that some corrective actions were imminent in the immediate short term. Now when the Markets are actually in a corrective mode, fresh short positions have started to resurface again. If we attempt to take a holistic view of the Markets, such fresh shorts may start providing supports at lower levels and the Markets may attempt some technical pullbacks. However, in any given case, any significant up move is very less likely. Overall, next week will remain highly stock specific and it is recommended to keep overall exposures moderate and adopt a cautious view on the Markets.

A study of Relative Rotation Graphs – RRG evidently show that the METAL pack which was showing leadership over past couple of weeks will now take a back seat and will continue to under-perform along with FMCG and PHARMA. Relative out-performance will now be expected from MIDCAP universe assisted with sectors like PSU Banks, Public Sector Enterprises, INFRA and some select stocks from REALTY. Autos are likely to continue to consolidate. MEDIA pack will continue to gather strength and may remain resilient in event of general Market weakness.

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, MSTA is Consultant Technical Analyst at Gemstone Equity Research & Advisory Services, Vadodara. He can be reached at milan.vaishnav@equityresearch.asia

Milan Vaishnav, CMT, MSTA

Technical Analyst

(Research Analyst, SEBI Reg. No. INH000003341)

Member:

CMT Association (Formerly Market Technicians Association, (MTA), USA