Gemstone Equity Research & Advisory Services

Thursday, May 24, 2018

MARKET OUTLOOK FOR THURSDAY,MAY 24, 2018

MARKET OUTLOOK FOR THURSDAY,MAY 24, 2018

The session on Wednesday remained damaging on technical terms for the Indian Equity markets. The NIFTY resumed its losing streak after taking a breather for a day and ended the day losing 106.35 points or 1.01%. Besides anything else, it was the confirmation of the breach of 100-DMA which was damaging. After spending nearly first half of the session just below the 100-DMA of 10538, the Index slipped and went on to even breach the 50-DMA level of 10469.

All is not well with the Markets as we step into Thursday’s trade. Though we expect a quiet start to the trade again, we might see some weakness persisting for some more time. The zones of 10380, which is a major 27-month long trend line support and the 10330 mark which is the 200-DMA now remains the sacrosanct support for the Markets.

Given the weakness on some of the indicators, it there are chances that the Markets may test these support areas before it gets oversold. The Relative Strength Index – RSI on the Daily Chart is 37.19 and it has marked yet another 14-period low which is bearish. The Daily MACD remains bearish while trading below its signal line. A big black candle emerged. The emergence of such candle near the important resistance area of 100-DMA signifies the credibility of the resistance area.

The resistance for any kind of up move remains at 10470 and 10538 levels with supports coming in at 10380 and 10330 levels

Pattern analysis confirms the breach of the 100-DMA levels on the Daily Charts. With the 50-DMA trading below the 100-DMA mark, and with the NIFTY ruling below both of these levels, the area of 100-DMA remains a important resistance area that the NIFTY will have to move past over coming days.

Overall, apart from PSU Banks and some resilience from the IT Index, the weakness had remained across the board. Up moves in NIFTY are likely to remain capped first 10470 and then at 10538 zones. Until these levels are breached on the upside, we will continue to see the Markets vulnerable at higher levels with every pullback. The NIFTY presently remains in no-trade zone and the sessions, just like the previous one, are likely to remain very much dominated with stock specific activities. We recommend refraining from creating any major positions and preserve liquidity to make quality purchases at each lower level. Continuance of cautious outlook is advised for the day.

STOCKS TO WATCH:

Fresh unwinding of long positions was seen in stocks like JP ASSOCIATES, AXIS BANK, RCOM, INFOSYS, IDFC, PNB, TATA POWER, RELIANCE, PETRONT, GRANULES, FEDERAL BANK, DLF, KOTAK BANK and HAVELLS.

(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

MARKET OUTLOOK FOR WEDNESDAY,MAY 23, 2018

MARKET OUTLOOK FOR WEDNESDAY,MAY 23, 2018

The Indian Equity Markets ended its 5-day losing streak and end the day with gains on Tuesday. The gains remained modest as the NIFTY closed with a gain of 20 points or 0.19%. As mentioned in our previous note, the NIFTY continued to resist to the 100-DMA mark of 10538 for the entire day and also ended the day while resisting to this level. NIFTY did achieved some stability on the analyzed lines.

Wednesday’s session is likely to remain on similar lines. We expect a quiet to modestly positive start to the trade. At the same time, the levels of 10538 which is the 100-DMA of the NIFTY will continue to remain a critical level to watch for the immediate short term. It will remain critically important for the Markets to open and sustain above 10538 to attempt a pullback.

Wednesday will see the levels of 10550 and 10615 acting as immediate resistance area for the Markets. Supports come in at 10510 and 10460 zones.

The Relative Strength Index – RSI on the Daily Chart is 43.6255 and it remains neutral showing no divergences against the price. The Daily MACD stays bearish while trading below its signal line.

If we look at pattern analysis, the 50-DMA still trades below the 100-DMA mark. This means that the NIFTY is presently under very short term sideways movement and has lost upward momentum over past couple of week. The zone of 10460-10538 is likely to remain a extremely important support zone over coming days.

Overall, NIFTY appears oversold on some of the oscillators. Further, after five days of ending with losses, NIFTY has attempted to stabilize on expected lines. Also, some F&O data also suggest some likely technical pullback happening. We also expect some continuation of short covering in the broader markets as well while quality stocks will continue to see modest purchases being made. We recommend a cautiously positive view on the Markets while continuing to keep overall exposures into check.