Gemstone Equity Research & Advisory Services

Thursday, February 22, 2018

MARKET OUTLOOK FOR THURSDAY, FEB 22, 2018

MARKET OUTLOOK FOR THURSDAY, FEB 22, 2018

Despite getting a better than expect start to the trade, the Indian equity markets failed to capitalize on the positive opening on Wednesday. After opening higher, the NIFTY pared all of its opening gains and remained lackluster for the major part of the session. It was only the last hour of the trade that saw some minor upsides. The benchmark Index ended with modest gains of 37.05 points or 0.36%.

Thursday is likely to see a quiet but positive start to the trade. Also, we enter the expiry day of the current derivative series and we will see the session remain heavily dominated with rollovers. We also expect a volatile trade tomorrow as the expiry has coincided with the Markets attempting to find base at current levels.

The levels of 10465 and 10490 will act as immediate resistance levels for the Markets. Supports come in at 10310 and 10275 zones.

The Relative Strength Index – RSI on the Daily Chart is 38.0586 and it remains neutral. It is also seen taking a pattern support and is inching higher. The Daily MACD stays bearish but it has started to narrow its trajectory. No significant formations were observed on Candles.

While having a look at pattern analysis, it is encouraging to see the NIFTY has as of now successfully defended the support of 100-DMA at Close levels. Some minor slip below this crucial support was seen but NIFTY stayed within its filter as of now and defend this crucial support.

All in all, we expect this struggle of NIFTY to defend the support of 100-DMA to continue. Also, in the same breath, good amount of shorts exists in the system. We observe that if the Markets do not breach its immediate supports, we may see short covering being triggered. We strongly recommend to avoid shorts as short trap may occur. There will be significant downsides only if the NIFTY ends below 10275-10300 zones but until then, liquidity should be preserved and all dips should be used in picking quality stocks. Cautious but positive outlook is advised for the day.

STOCKS TO WATCH:

Resilient technical setup is seen in stocks like SCHNEIDER ELECTRIC, RELIANCE, TECH MAHINDRA, FIRST SOURCE SOLUTIONS, AXIS BANK, JAIN IRRIGATION, DHFL, FUTURE CONSUMER, MIND TREE and TV18 BROADCAST.

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 21, 2018

MARKET OUTLOOK FOR WEDNESDAY, FEB 21, 2018

MARKET OUTLOOK FOR WEDNESDAY, FEB 21, 2018

After remaining range bound with modest gains for most part of the session on Tuesday, the benchmark NIFTY50 pared its gains rapidly in the last hour of the trade. It ended negative losing 18 points or 0.17%. Going into trade on Wednesday, we enter the penultimate day of expiry of current derivative series. We expect a tepid start to the trade and also expect volatility to remain ingrained in the session.

In our previous note, we had elaborated on the behavior of the Markets vis-à-vis the levels of 100-DMA and the support zone of 10300-10276. Wednesday’s market analysis will remain no different. NIFTY has ended a notch below 100-DMA mark which stand at 10398. But it has remained within its filters and its behavior vis-à-vis the support zone of 10276-10300 would be extremely crucial.

The levels of 10395 and 10450 will play out as immediate resistance area for the Markets. Supports come in at 10310 and 10275 zones.

The Relative Strength Index – RSI on the Daily Chart is 35.4477. It has once again shown a Bullish Divergence against the NIFTY. NIFTY has formed a fresh 14-period low while RSI has not done so. Daily MACD stays bearish trading below its signal line. No significant formation were observed on Candles.

While having a look at pattern analysis, NIFTY failed to clear the resistance area of 10480-10500 and while retracing from those levels, also slipped below the 100-DMA mark of 10398. However, it stays within its filter and trades near important short term support zone.

Overall, if we take a extremely short term view, persistent Bullish Divergences on the lead indicators reflect the struggle and the attempts of the NIFTY to find a base around current levels. However, for this to happen, it will have to move past the 100-DMA mark comfortable and advance further towards 50-DMA. Unless this happens, NIFTY will remain at the mercy of the immediate support zone of 10300-10275. Any breach of this will bring in fresh weakness. There are large numbers of shorts opening up in the system. Looking at this input and coupled with the fact that NIFTY currently trades near to its short term support, we do not recommend opening fresh aggressive shorts in the Markets. We recommend staying away from creating major exposures and continue to make select quality purchases in select sectors wherein relative out-performance will be seen.

STOCKS TO WATCH:

Long positions were seen being added in STATE BANK, DISHTV, VEDANTA, ASHOK LEYLAND, ONGC, TATA MOTORS, EQUITAS, NMDC, JSW STEEL, HINDALCO and AMBUJA CEMENT.

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