Gemstone Equity Research & Advisory Services

Tuesday, March 20, 2018

MARKET OUTLOOK FOR TUESDAY, MAR 20, 2018

MARKET OUTLOOK FOR TUESDAY, MAR 20, 2018

Indian Equity Markets had a very disappointing session as the NIFTY slipped below its very crucial 200-DMA to end the day below it. Markets remained in the declining trajectory for the entire session and the NIFTY ended the day losing 100.90 points or 0.99%. Advance-Decline Ratio remained heavily in favor of the declines.

As we approach Tuesday’s trade, we stare at a probable break of key support levels. We are presently dealing with the two most important support levels of the recent past. The first level is 10163 which is the 200-DMA on the Daily Charts; and second, is the 28-month long upward raising trend support of 10040. The zones of 10040-10163 are expected to provide very serious support to the Markets failing which we will stare at a possible initiation of a intermediate bear t rend.

Tuesday will see the levels of 10160 and 10230 as a potential resistance area. Supports come in at 10040 and 9980 zones. There are still chances that NIFTY might hold on to these supports at Close.

The Relative Strength Index – RSI on the Daily Chart is 34.0379. A bullish divergence is observed. NIFTY formed a fresh 14-period low while RSI did not. The Daily MACD has reported a negative crossover. It is now bearish while trading below its signal line.

If we look strictly at the pattern analysis, though the NIFTY has ended below its 200-DMA, it still stays within its filter. Further, it also eyes another important pattern support of 10040 which remain in very close vicinity. On a theoretical note, NIFTY still has chance to avert more weakness if it manages to crawl above 200-DMA again.

Overall, it would be extremely crucial to see how the Markets behaves vis-à-vis the levels of 10040-10160 at Close levels. The NIFTY will be able to avert the weakness if it manages to crawl back above these levels. However, at the same time, we now have to take into account the fact that if the levels of 10040 is significantly breached, we are staring at some prolonged weakness and the levels of 200-DMA will become a resistance for the Markets in the immediate short term. We advice refraining from taking any major directional view until a validation of the current trend comes. A highly cautious view is advised for tomorrow.

STOCKS TO WATCH:

Amid chaos, fresh longs were also seen being added in stocks like NALCO, SRF, TATA COMMUNICATIONS, DIVIS LAB, GAIL, RELIANCE, POWER GRID, STAR, MARICO, GRASIM, PETRONET, LARSEN & TOUBRO and TITAN.

(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 19, 2018

MARKET OUTLOOK FOR MONDAY, MAR 19, 2018

MARKET OUTLOOK FOR MONDAY, MAR 19, 2018

Friday’s session remained weaker-than-expected as the NIFTY opened low, drifted even lower and went on to end the day with a loss of 165 points or 1.59%. Despite the fact that the Markets saw large number of shorts piling up, the Index showed no inclination to recover. A very minor recovery was seen towards the end but it did no good to the overall closing of the Markets.

We open the fresh week on Monday with a little precarious situation. We have been grossly underperforming the global markets on one hand. On the other, we have seen significant amount of shorts that have piled up in the system.

As we approach Monday’s trade, there are two distinct possibilities. We might see a subdued opening and there are chances that the 200-DMA levels of 10161 may be tested and might see some intraday violation as well. Also, there are equally good amount of chances that Markets find support once again at 200-DMA and it is not violated at Close.

We will see very strong supports coming in the 10040-10160 zones. Resistances can be faced near 10245 and 10310 zones on the upside.

The Relative Strength Index – RSI on the Daily Chart is 37.6497 and it remains neutral showing no divergence against the price. Daily MACD continues to remain bullish while trading above its signal line.

If we look at pattern analysis, the NIFTY currently stands near to a very strong support of 200-DMA on the Daily Charts. This level is followed by a strong pattern support at 10040. So, in a way, the zones of 10040-10160 pose a very serious and long term support for the Markets.

Overall, though there is no denying to the fact that the zones of 10040-10160 provide for a strong support area. We also take into account the large number of shorts that have been added all through the previous week. However, until the NIFTY at least potentially marks this as a bottom, we need to continue to take a ultra-cautious view on the Markets. The reason is that in even of violation of these levels, we may see some more pain in the Markets over coming days. However, there is still no structural breach on the Charts and given the other piece of evidences; we can expect potential marking of bottoms near current levels.