Gemstone Equity Research & Advisory Services

Sunday, March 11, 2018

WEEKLY MARKET OUTLOOK FOR MAR 12 THRU MAR 16, 2018

WEEKLY MARKET OUTLOOK FOR MAR 12 THRU MAR 16, 2018

The Indian Equity Markets extended their corrective move in the sixth week as well as the benchmark Index NIFTY50 ended yet another week on a negative note losing 231.50 points or 2.21% on Weekly basis. The Week remained important from the technical point of view as the NIFTY tested its 200-DMA twice and have managed to defend it so far on the Daily Charts. While on the Weekly Charts, the Markets continue to remain in the 27-month long upward rising channel showing without showing any breach of any kind.

As we go into trade next week, the Markets remain on tenterhooks. The Markets have shown half-hearted signs of finding a base for itself at current levels. However, strong closing of the global markets on Friday is certain to give a positive start to Indian Markets on Monday. However, the crucial thing is that we need to sustain above the 10275-10300 zones after a positive start. It would be crucial to observe if the Markets maintain the likely positive start that it may get on Monday.

On the lower side, a strong support exists at 10140 and 10040 and these levels are not likely to be breached. On the higher side, we may see resistance coming in at 10390 and 10465 zones. The range for this week might remain slighter broader.

The Relative Strength Index – RSI on the Weekly Chart is 47.1613 and it has marked a fresh 14-period low which is bearish. It does not show any divergence against the price. The Weekly MACD stays bearish while trading below its signal line. A falling window emerged on Candles. This is usually a gap and implies continuation of downsides. However, this cannot be read in isolated manner and in the present context may not have a significant negative impact.

The pattern analysis paints a reassuring picture showing no structural breach by the Markets because of the present corrective move. It continues to remain in the 27-month long upward rising channel as evident on the Charts.

Overall, the coming week is a week that we need to watch with our fingers crossed. Strong global markets will provide us a footing for a likely positive start but it would be equally crucial to see if we are able to sustain it and capitalize on it. Given the fact that 200-DMA stays defended on Daily Chart and given the fact that the 27-month long upward rising channel on the Weekly chart continue to remain intact, we believe that likely stronger opening should not be used to create shorts again. We are perhaps, of course subject to confirmation, going in the time again when we start buying the weaknesses rather than selling the strength. Positive caution is advised for the coming week.

A study of Relative Rotation Graphs – RRG this week paint a little challenging picture. IT continues to dominantly remain in the leading Quadrant and it expected to relatively outperform the Markets. Apart from that, we will see sectors like ENERGY, Financial Services, Bank Nifty, attempt to improve their momentum though they may not distinctly outperform the general Markets. Along with these sectors, select stocks from FMCG, METAL and Services sector may attempt to put good performance. However, though not significant, but some improvement in momentum is also expected from broader indices. Apart from this, no eye-catching show is expected from REALTY, SMALL CAPS, PSUBANKS, PSE Stocks, PHARMA, INFRA and AUTO Universe.

Important Note: RRG™ charts show you the relative strength and momentum for a group of stocks. In the above Chart, they show relative performance as against NIFTY Index and should not be used directly as buy or sell signals.

(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

Friday, March 9, 2018

MARKET OUTLOOK FOR FRIDAY, MAR 09, 2018

MARKET OUTLOOK FOR FRIDAY, MAR 09, 2018

Some short covering was witnessed in Thursday’s session as the benchmark Index NIFTY50 stopped its 6-day losing streak to end in the green. The NIFTY ended the day gaining 88.45 points or 0.87% though not before paring some gains from the high point of the day. The Markets failed to capitalize on the strong opening it enjoyed in the earlier trade. However, the short covering took the Markets higher later on.

Going into trade on Friday, we still need to approach the Markets with caution. It is likely that the Markets enjoy good opening again. However, it is just not completely out of the woods. Markets will have to crawl above the 10275-10300 zones and it would also need to see that the current short covering that it witnessed gets replaced with fresh buying.

In Friday’s trade, the levels of 10275 and 10320 will act as immediate resistance levels for the Markets. Supports come in lower at 10210 and 10150 levels.

The Relative Strength Index – RSI on the Daily Chart is 37.0612 and it remains neutral showing no divergence against the price. The Daily MACD stays bearish while trading above its signal line. On the Candles, a white body with long lower shadow emerged. It remains significant as it occurred near important support area of 200-DMA. This has capacity to potentially mark a bottom. This also needs confirmation on the next trading day.

While having a look at pattern analysis, the NIFTY has given a downward breakout from the 10276-10300 support area. In the attempts to find bottoms, it has tested the 200-DMA support levels twice intraday.

Overall, there is no doubt that the Markets have attempted to take support at its 200-DMA and has defended it twice. However, this effort will get confirmed only after the NIFTY moves past 10275-10300 resistance area. Until this happens, it will theoretically continue to remain vulnerable to volatile selling bouts. We recommend traders to refrain from creating major short positions. Longs, however, should be taken very selectively as well. Cautious outlook is advised until the Markets establish a clear directional bias after confirming a bottom for the immediate short term.