Gemstone Equity Research & Advisory Services

Thursday, February 1, 2018

MARKET OUTLOOK FOR THURSDAY, FEB 01, 2018

MARKET OUTLOOK FOR THURSDAY, FEB 01, 2018

The Indian Equity Markets remained volatile on expected lines. Though the benchmark NIFTY50 recovered smartly in the last hour of the trade by nearly 60-odd points, it still settled the day with net loss of 21.95 points or 0.20%.

As we go ahead into the session on Thursday, we need to look at it in little special and different way. We face Union Budget, which is undoubtedly one of the most important domestic events that a Market faces. Having said this, we also need to understand that many times, pure technical reading is never enough on such days and we need to have a broader and macro view of the Market’s behavior.

We expect a quiet start to the trade on Thursday and until the Budget proposals start rolling in, we expect range bound trade in the morning. Only after the proposals start rolling in, we will see volatility creeping in the session. With the levels of 11,170 and 10,235 acting as immediate resistance to the Markets, we expect the levels of 10910 acting as strong support unless anything nasty comes up in the Budget.

The Relative Strength Index – RSI on the Daily Chart is 70.4888 and it remains neutral to the price showing no divergence. The Daily MACD remains bullish. On Candles, an on-neck line occurred. However, in the present formation, it does not hold any significance.

Pattern analysis shows that NIFTY has taken a breather after a stellar rally that it saw in January. It is seen taking a breather and has marked 11,170 as its immediate major resistance level.

Overall, while we go into the trade on Thursday, we need to have a look at two to three previous sessions. While the front line stocks, and the benchmark NIFTY50 consolidated while the broader Markets saw some good correction. Also, if we look at sector Indices, barring the ones like IT, majority have not made any major headway since November and are already into what is known as time correction with minor declines. Also, the NIFTY PCR (Put to Call Ratio) which touched nearly 1.90 has come down significantly and more so after the short covering that was seen in Wednesday’s session. With all this, we can conclude that though volatility is something that will certainly remain; we do not expect any major downsides unless something very nasty comes up in the Budget. We expect effective sector rotation happening with focus on sectors that will benefit from the Budget and Markets are likely to move on after knee-jerk reactions. Major downsides expected only if fundamentally nasty proposals are left to be digested by 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

Wednesday, January 31, 2018

MARKET OUTLOOK FOR WEDNESDAY, JAN 31, 2018

MARKET OUTLOOK FOR WEDNESDAY, JAN 31, 2018

The benchmark NIFTY50 suffered a modest down tick and saw some corrective pressure as it opened lower on Tuesday, made no attempts to recover and ended the day with net loss of 80.75 points or 0.73%. We may say that the pause in unabated rally in Equities was global in nature as the Asian and European Markets too saw modest corrective declines. Coming back to Indian Markets, while we go into trade on Wednesday, we expect such minor corrective pressure to persist as the Markets may adjust themselves before heading in to the Budget session on Thursday. We also expect market-wide volatility also to creep in and persist for some time which would include the front line Indices and the broader Markets as well.

Wednesday will see the levels of 11090 and 11165 playing out as immediate resistance area while supports will come in at 10990 and 10940 zones.

The Relative Strength Index – RSI on the Daily Chart is 72.8565. Though they remain modestly overbought, they stay neutral against the price showing no divergence against the price. The Daily MACD is still bullish. It currently trades above its signal line. No notable formations were seen on Candles.

Pattern analysis shows the Market taking a breather after a strong run-up. In most likelihood, we can expect the Index to consolidate while resisting to 11,170 levels. Unless there is resumption of rally fuelled by Union Budget, we will see this level of 11,170 acting as immediate top and the Markets resisting around those levels with limited downsides.

All and all, it would be no surprise if the Markets see themselves getting volatile ahead of Budget Session on Thursday. Some lightening and churning of positions is expected and this is likely to lead to volatile movements. Some intermittent profit taking bouts too cannot be ruled out. Though the downsides are expected to remain limited, we recommend reducing overall exposures to moderate levels. It is also advised to preserve cash which would enable the trades to take further definitive directional bias post Union Budget. Continuance of cautious outlook is advised for the day.