Gemstone Equity Research & Advisory Services

Monday, March 12, 2018

MARKET OUTLOOK FOR MONDAY, MAR 12, 2018

MARKET OUTLOOK FOR MONDAY, MAR 12, 2018

In our previous Daily note on Friday, we had mentioned about the importance of the NIFTY moving past the 10275-10300 zones to confirm a temporary base. The Markets remained tentative all though the Friday’s session and the benchmark Index NIFTY50 struggled to move past the 10275-10300 zones and saw retracement once it tested those levels. It ended the day with a modest loss of 15.80 points or 0.15%.

While we enter a fresh week, Monday’s trade is likely to see a stable and strong opening ensured by strong global markets. Having said that, the likely strong opening will see the Markets opening above 10275-10300 zone. However, it would be once again critical to see if the Markets sustains and maintains itself above those levels. In all likelihood, we will see Markets defending those levels.

Monday will see the levels of 10300 and 10365 posing as immediate resistance area for the Markets. Supports come in at 10210 and 10140 area.

The Relative Strength Index – RSI on the Daily Chart is 36.4385 and it stays neutral against the price showing no divergence. It is seen taking a pattern support as well. Daily MACD stays bearish while trading below its signal line. No significant formations were observed on Candles.

Pattern analysis highlights the credibility of the support that is provided by 200-DMA. NIFTY tested this level twice during last week and each time it did so, it has defended it as well. In the immediate short term, we believe this level will stay defended and will not see NIFTY breaching this level in the immediate short term.

Overall, as mentioned, despite a stable and strong opening which is likely on Monday, sustenance above those levels and capitalizing on such possibly strong opening will remain key thing to watch for. Moving past 10275-10300 zones will see the Markets back into the rectangle trading channel that it has formed after the recent corrective decline. If this happens, we see Markets advancing towards its next logical resistance of 100-DMA which stands at 10452. Though cautious, but positive outlook is advised for the day.

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

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)