Gemstone Equity Research & Advisory Services

Tuesday, February 6, 2018

MARKET OUTLOOK FOR TUESDAY, FEB 06, 2018

MARKET OUTLOOK FOR TUESDAY, FEB 06, 2018

The session on Monday remained much on expected lines. The Markets opened lower in line with global weakness but did not breached its opening lows and ended with net loss of 94.05 points or 0.87%. The benchmark NIFTY50 came off nearly 80-odd points from the lows of the morning. In our previous note, we had mentioned above NIFTY attempting to form a base around current levels. In line with this reading, NIFTY did fiercely attempt to form a base in the 10550-10650 zones. The selling was present in Monday’s session but was not an indiscriminate one and select pockets grossly out-performed the general Markes.

Going into trade on Tuesday, we see a quiet to modestly positive start to the trade. With the levels of 10710 and 10765 acting as resistance, we expect a pullback that began from lows of Monday to continue. Supports exist at 10610 and 10550 zones.

The Relative Strength Index – RSI on the Daily Chart is 43.2131 and it has marked a fresh 14-period low which is bearish. It does not show any divergence against the price. The Daily MACD stays bearish while trading below its signal line. On Candles, a falling window occurred. However, in the present nature of formation, it holds little significance.

The pattern analysis shows NIFTY attempting to form a base around 10550-10650 zones. This zone is likely to act as strong support base as this was the point from where the Markets had initiated its latest upmove.

All in all, we expect the Markets to consolidate its present status and find a bottom. It is also important to note that the current correction is because of not just domestic factors or out of reactions to Union Budget but also a part of global risk-off that is taking place. We recommend preserving cash and utilize all dips to make quality purchases. We expect that sectoral out-performance will continue. Though volatility might continue to purchases, good quality stocks will find bargain buying at lower levels.

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, February 5, 2018

MARKET OUTLOOK FOR MONDAY, FEB 05, 2018

MARKET OUTLOOK FOR MONDAY, FEB 05, 2018

The session on Friday following the Union Budget remained quite ugly as the Markets refused to digest proposals like LTCG coming in while STT not going away. Taking shelter under such reasons, the Markets, which were anyway showing signs of fatigue over last couple of days took a deep cut as the benchmark NIFTY ended the day with net loss of 256.30 points or 2.33%. The broader Indices took even deeper cuts losing anywhere between 4% to 10%. Going into trade on Monday, we expect a modestly negative and volatile start to the trade. There has been global corrective mood in the Equities and this may affect Indian Markets as well over and above the domestic reasons.

However, having said this, we expect that a percentage here or there, we may see NIFTY attempting a temporary formation of base anytime soon. The levels of 10830 and 10880 might act as resistance on the way up, supports exist a 10700 and 10645 zones.

The Relative Strength Index – RSI on the Daily Chart is 48.3699 and it has formed a fresh 14-period low which is bearish. Also, a bearish divergence is seen as the RSI has formed a fresh 14-period low while the NIFTY has not yet. Daily MACD has reported a negative crossover and it is now bearish trading below its signal line. A big black candle that has emerged gives credibility to the resistance area of 11000-11170 zones.

Pattern analysis shows that NIFTY as taken a sharp breather and has formed a temporary top in the 11000-11170 zones. It has also slipped below its short 20-DMA and might take some time to form a base and consolidate to resume its up move.

All in all, there might be some short term turbulence that might persist in the Markets. However, downsides should get arrested from one or one and half percentage point from current levels. While this happens and Markets prepares to move up again, a tactical shift is expected to sectors like Infra, select pack of Auto, Media etc. Lot of portfolio churning is expected and we will see distinct out performance in select stocks. With Markets dominantly above its 50, 100 and 200-DMA, there is no reversal of trend. This is a disruption in primary trend and dips should be used to make portfolio purchases.