Gemstone Equity Research & Advisory Services

Tuesday, January 30, 2018

MARKET OUTLOOK FOR TUESDAY, JAN 30, 2018

MARKET OUTLOOK FOR TUESDAY, JAN 30, 2018

After a day or two of minor consolidation, the broader Markets resumed its up move on Monday with a gap up opening and scaling a bit higher in the session. The benchmark Index, NIFTY50, though came off a bit from the high point of the day, ended with net gains of 60.75 points or 0.55%. Though the frontline Markets performed well, the pain remained evident in the broader Markets. While we go into the trade on Tuesday, we expect these cracks in the broader Markets to persist for some time while the NIFTY attempts to scale higher. We continue to remain buoyant on the immediate outlook but also sound caution as gross under-performance in the broader Markets may remain for some time.

The levels of 11,155 and 11,235 will continue to remain immediate resistance area for the Markets. Supports come in lower at 11,105 and 11,065 zones.

The Relative Strength Index – RSI on the Daily Chart is 82.2992 and it remains in overbought territory. It also show a bearish divergence as while the NIFTY marked a fresh 14-period high, RSI did not do so. A white body emerged on Candles but it remains insignificant in the present context and structure of the Charts.

The pattern analysis show that the breakout achieved by NIFTY after moving past 10490-mark remains firmly in place. There are minor signs of fatigue at higher levels and given the overbought nature of the Markets, we need to take this with some caution.

Overall, there is no denial to the fact that the liquidity is chasing the momentum. However, the important point that draws our attention is that the smart money is chasing the large caps while the broader Markets has started to consolidate and show minor internal corrective cracks. We recommend remaining extremely cautious at current levels. Though traders are left with little option but to chase the momentum, this should be done with great care remaining highly selective while picking stocks. Cautious outlook is advised for the day.

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

Monday, January 29, 2018

MARKET OUTLOOK FOR MONDAY, JAN 29, 2018

MARKET OUTLOOK FOR MONDAY, JAN 29, 2018

The benchmark Index NIFTY50 saw less volatility than what was expected on the expiry day of the December series. However, it did see a modest corrective move in the first half of the session. However, the Index saw a 60-point recovery to end the day with a modest loss of 16.35 points or 0.15%. Markets will go into the trade on Monday with a long weekend following a trading holiday on Friday. Though the indicators are overbought all over, we expect the Markets to attempt a modestly positive opening once again. The Asian Markets, especially the Hang Seng ended with gains on Friday and we expected NIFTY will follow suit.

However, this being said, we cannot at any point ignore the overbought nature of the Markets and that fact that we will face one of the most important domestic event that of Union Budget later this week. The levels of 11110 and 11135 will play out as major resistance area for the Markets. Supports come in lower at 10965 and 10930 zones.

The Relative Strength Index – RSI on the Daily Chart is 80.5369 and it stay neutral against the price. However, it trades in the overbought territory. The Daily MACD remains bullish while trading above its signal line. A candle with a long lower shadow has emerged. This has little significance at current position but can temporarily halt an up move.

The pattern analysis shows that after breaking above the 10490-mark, the NIFTY has achieved its measured targets and is now expected to take a minor breather with the level of 11,110 acting as immediate resistance.

Overall, though some early positive movement in the Markets cannot be ruled out, we might see some intermittent corrective bouts happening at higher levels. Broader markets may see some relatively more pain in event of any corrective activity taking place from higher levels. However, with the uptrend remaining firmly in place, we do not recommend creating any significant short positions. Instead, all sharp up moves should be continued to be utilized in protecting profits at higher levels.