Gemstone Equity Research & Advisory Services

Monday, June 25, 2018

MARKET OUTLOOK FOR TUESDAY,JUNE 26, 2018

MARKET OUTLOOK FOR TUESDAY,JUNE 26, 2018

The Indian Equity Markets returned bulk of its previous day’s gains on Monday as it ended the first day of the Week on a negative note losing 59.40 points or 0.55%. The Markets traded stable for the major part of the session but it was the last hour of the trade that saw the weakness creeping in. The NIFTY’s struggle with the falling trend line pattern resistance continues and with NIFTY not able to move past the critical 10820-10850 zones, it is getting vulnerable to pressures as it moves into the apex of the broad symmetrical triangle that it has been trading in.

Stepping into Tuesday’s trade, we see possibilities of weakness persisting due to the weaker global picture. In any case, the zones of 10820-10850 continue to pose critical resistance to the Markets.

Tuesday will see the levels of 10820 and 10850 offering resistance while supports are expected to come in at 10740 and then at 10680 in form of 50-DMA.

The Relative Strength Index – RSI on the Daily Chart is 52.8408. It continues to remain neutral showing no divergence against the price. Daily MACD stays bearish while trading below the signal line. The emergence of a strong black body on Candles has once again lent credibility to the pattern resistance.

Pattern analysis shows NIFTY continuing to fiercely resist to the falling trend line which joins the high of 11170 to the subsequent lower tops. While it continues to remain in a broad symmetrical triangle pattern, it is moving near its apex and is becoming prone to a sharp move in coming days.

Overall, it is time that we once again tread the Markets with some caution. Though it currently rests very near to its short term 20-DMA, any weakness will make sure that the NIFTY tests its 50-DMA. Also, with each day with no directional move happening, NIFTY is also making itself vulnerable to a sharp move that will lead to resolution to the current pattern. We recommend staying away from taking any major directional call and avoid heavy purchases. Shorts too should be avoided until Markets makes any meaningful directional move. While remaining light on positions, preservation of cash with cautious view on the Markets is advised for the day.

STOCKS TO WATCH:

Relatively resilient technical set up is observed in PNB HOUSING, SUN TV, NBCC, TECH MAHINDRA, FIRST SOURCE, INFOSYS, UPL, TVS MOTORS, BEML,OIL INDIA, HAVELLS and INDIGO.

(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

Sunday, June 24, 2018

MARKET OUTLOOK FOR MONDAY,JUNE 25, 2018

MARKET OUTLOOK FOR MONDAY,JUNE 25, 2018

After trading initially in the red in the first half of the session and with modest gains after than on Friday, the Indian Equity Markets saw a sharp upsurge in the last hour of the trade. The benchmark Index NIFTY50 saw a sharp up move and finally ended the day gaining 80.75 points or 0.75%. This was mainly led by short covering as the NIFTY futures ended with premium and with shedding of net Open Interest.

As we approach Monday and also the beginning of the expiry week of the current derivative series, the opening levels and the behavior of the NIFTY vis-à-vis the level of 10850 continues to remain very critically important. Sooner the NIFTY moves past this level, larger will be the chances of a sustainable up move in coming days. Any drift or failure to move past this level for too long will make the NIFTY vulnerable once again to volatility and profit taking bouts.

The levels of 10850 and 10895 will act as important resistance levels for Monday. Supports come in at 10780 and 10740 zones.

The Relative Strength Index – RSI on the Daily Chart is 57.5545. It remains neutral showing no divergence against the price. The Daily MACD still remains bearish while trading below its signal line. No significant formation was observed on Candles.

If we have a look at pattern analysis, NIFTY is still in a broad symmetrical triangle formation and is moving further into the apex. Also, in the process, it is continuing to vehemently resist to the falling trend line which joins the high of 11170 with the subsequent lower tops.

Overall, if we analyze the broader picture, NIFTY did not correct significantly whenever it met with a pattern resistance. Instead, it chose to consolidate in a capped range with some amount of volatility ingrained in it. We may see this behavior of the NIFTY as its underlying strength. However, until a resistance is breached on the upside, it gets little speculative to anticipate a breakout unless few indicators point towards such anticipated breakouts. We still advice to exercise caution and keep exposures at modest levels. Shorts should be avoided and major directional call can be taken if the NIFTY moves past and closes above 10850-mark with conviction.