Gemstone Equity Research & Advisory Services

Thursday, February 8, 2018

MARKET OUTLOOK FOR THURSDAY, FEB 08, 2018

MARKET OUTLOOK FOR THURSDAY, FEB 08, 2018

In our previous note, we had mentioned about high possibility of the Markets attempting to find a base and had also expressed high possibility the Markets may also remain bit volatile and still continue to oscillate in a range. The benchmark NIFTY50 enjoyed a relatively strong opening on Wednesday but gave up all of its gains and ended the day with a modest loss of 21.55 points or 0.21%. Going into trade on Thursday, there are high probabilities that the Markets may again enjoy a positive opening. However, sustenance of the good start, if any, and the behavior of the Markets vis-à-vis the levels of 10500-mark will be crucial to watch for.

The levels of 10590 and 10630 will play out as immediate resistance area for the Markets. Supports come in at 10450 and 10410 zones.

The Relative Strength Index – RSI on the Daily Chart is 35.0248 and it has formed a fresh 14-period low which is bearish. The Daily MACD is still bearish as it trades below its signal line. On the Candles, a black body emerged. In the present scenario, it does not result into any significant formation.

The pattern analysis shows that NIFTY is making evident efforts to form a bottom in the present area. After occurrence of a big white body near the 100-DMA support area, the following session resulted into a higher top and bottom. However, it would be important for the Markets to remain above the 10500-mark to attempt any pullback.

The 10480-10500 zone represents an area wherein the NIFTY struggled quite a bit in the last quarter of 2017. Therefore, while correcting from the recent highs, these levels are expected to lend support at some point of time. Therefore, the behavior of the Markets against the 10500-mark will be crucial. For any technical pullback to occur, it would be important for the Markets to remain above this mark. A bullish divergence is observed on the Daily Chart over Stochastic. Though this cannot be read singularly in isolation, it certainly exhibits attempts by the Markets to find a base. We reiterate continue making select purchases with every corrective move while adopting 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

Wednesday, February 7, 2018

MARKET OUTLOOK FOR WEDNESDAY, FEB 07, 2018

MARKET OUTLOOK FOR WEDNESDAY, FEB 07, 2018

Markets had a much worse-than-expected and dismal start to the trade on Tuesday. The opening was a big gap down following a overnight rout in the equity markets that had started from US. The opening of NIFTY was much in line with the Asian peers which were trading 3% to 4% lower. However, post such weak opening, Indian Markets grossly out-performed on relative basis with the Asian peers as it recovered nearly 200-points from the low point of the day. The NIFTY validated 100-DMA as its support and it has formed potential base in the 10250-10300 zone.

Going into trade on Wednesday, we can still expect some modest negativity in the initial trade. However, the levels of 10450 and 10375 will play out as major support unless some drastically goes wrong with the global markets overnight. On the higher sides, Markets may find resistance at 10545 and 10610 zones.

The Relative Strength Index –RSI on the Daily Chart is 35.8479 and it has marked a fresh 14-period low which is bearish. The Daily MACD is bearish while trading below its signal line. On Candles, a big white body has occurred. In the present circumstance, it has occurred near the 100-DMA area and therefore, it has marked 100-DMA as a potentially strong bottom for the NIFTY

Pattern analysis show that Markets have returned majority of its gains that it achieved after breaking out from 10200-mark.

It is also important to observe that present weakness in equities is global in nature and has nothing to do with any domestic reasons. Because of this, such global corrections remain short term in nature. In past, whenever there have been such synchronized global correction, they have remained very short lived. While they last, the domestic markets have typically decoupled themselves while attempting to out-perform the peers on relative basis.

Overall, though a likely base has been formed, we may not find the Markets showing a sharp one way relief rally. We expect some volatility to persist and some oscillations to happen before a definite base has been formed. All this is presuming there is no overnight continuation of any major weakness in the global markets. At this juncture, we would like to reiterate that this is nothing but a bull market correction and the primary uptrend still remain in place. We strongly recommend utilizing all such opportunity to make portfolio purchases. Traders are advised to preserve cash and also make some modest selective purchases at lower levels.