Gemstone Equity Research & Advisory Services

Tuesday, March 6, 2018

MARKET OUTLOOK FOR TUESDAY, MAR 06, 2018

MARKET OUTLOOK FOR TUESDAY, MAR 06, 2018

The Indian Equity Markets began its week much on expected lines. The benchmark index NIFTY saw a weaker opening as anticipated and ended the day losing 99.50 points or 0.95%. The weakness was in line with global markets that faced weaker sessions following Trump administration stets to levy 25% and 10% duties on steel and aluminum respectively. If we look at Monday’s trade from purely technical point of view, the NIFTY still remains within critical support area of 10276-10310 zones.

While we approach Tuesday’s trade, we expect the Markets to see some stability. Though a quiet start is expected, we do not see the breach of the 10276-10310 support area. The behavior of Markets vis-à-vis this support area will be important as the way it is expected to act as sacrosanct support, any breach of this area will bring in weakness for the Markets. On the upper side, the levels of 10410 and 10465 will play out as resistance area.

The Relative Strength Index – RSI on the Daily Chart is 38.7266 and it has shown a Bullish Divergence against the price. The NIFTY has set a fresh 14-period low while RSI did not follow the suit. The Daily MACD still remains bearish as it trades below its signal line. A falling window occurred on Candles which usually implies continuation of current trend. However, since this has occurred near the support zone, it may have limited negative impact.

If we look at pattern analysis, the NIFTY still remain in the broad congestion area that it has created for itself following its most recent decline. It will remain in this area until it trades above 10275-mark which is expected to act as sacrosanct support for the Markets.

Overall, the behavior of Markets vis-à-vis the levels of 10310-10276 will be extremely crucial to watch. We expect global markets to stabilize and in turn also expect some stability in the domestic markets as well. This increases the chances of the Markets defending the support zone and attempt to find some stability in the immediate short term. Incremental shorts were seen being added in the system which further increases the chance of the Markets finding support in the 10275-10310 support area. While avoiding any major positional bias, cautious outlook is advised for the day.

STOCKS TO WATCH:

Fresh longs were seen being added in STATE BANK, TECH MAHINDRA, NTPC, MANNAPURAM FINANCE, MINDTREE CONSULTING, M&M, TATA GLOBAL, TCS, SUN PHARMA, VOLTAS and HEXAWARE.

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

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, March 5, 2018

MARKET OUTLOOK FOR MONDAY, MAR 05, 2018

MARKET OUTLOOK FOR MONDAY, MAR 05, 2018

The Markets shall open on Monday after a slumber following long weekend. On Thursday’s trade, saw the last hour cautionary selloff following which the benchmark NIFTY50 ended the day with net loss of 34.50 points or 0.33%. Friday has remained a globally weak day following the Trump administration issuing a diktat to impose 25% duty on Steel and 10% on aluminum which was not received well by the global markets.

Going into trade on Monday, it is very much likely that we may see a negative opening. However, having said that, we also believe that the opening would not be as brutal as it would have if we had opened on Friday. On the Friday’s trade, the Dow recovered nearly 500-odd points from the low point of the day before ending with minor losses. The SGX NIFTY which had lost 180-odd points on Thursday recovered nearly 70-points from the low point of the day.

Monday’s trade is likely to see the zones of 10275-10310 providing key supports even if the weakness is more-than-expected. In routine course, the zones of 10380 and 10350 are likely to act as likely supports. Resistance remains in the 10490 and 10545 zones.

The Relative Strength Index – RSI on the Daily Chart is 43.5116 and it stands neutral showing no divergences to the price. The Daily MACD still remains bearish as it trades below its signal line. No significant formations were observed on Candles.

While having a look at pattern analysis, as of today, the NIFTY is still in the congestion area that it has created for itself following its most recent decline. It is in form of a small symmetry and the NIFTY has currently taken support at its 100-DMA at Close levels.

All and all, though weaker opening on Monday cannot be ruled out; the quantum of weakness that we will see will largely define the trend for coming days. We expect not-so-brutal weakness and reaction in the Markets on Monday. Also, we expect that the Markets will not breach the congestion area that it is currently trading in. Looking at the amount of shorts that exists in the system, we expected them to provide cushion to the Markets at lower levels. We recommend participants taking a highly cautious view on the Markets. However, large shorts should be avoided and overall exposures should be kept moderate.