Gemstone Equity Research & Advisory Services

Saturday, January 20, 2018

WEEKLY MARKET OUTLOOK FOR JAN 22 THRU JAN 26, 2018

WEEKLY MARKET OUTLOOK FOR JAN 22 THRU JAN 26, 2018

The benchmark NIFTY50 spent the earlier week in consolidating in a capped range but it utilized this week that went by in extending its gains. The Index saw itself ending on a robust note scaling new life time highs. The NIFTY ended the week posting net gains of 213.45 points or 2.00%. The coming week is the expiry week and it would be obvious that we will see the second half of the week remaining dominated with rollover centric activities.

However, apart from this, going into trade next week, the NIFTY faces a tricky situation. We expect the Markets to remain volatile but trade with positive bias. The NIFTY has currently tested the upper trend line of the 24-month long rising channel drawn from beginning of 2016. It would be extremely important to see if the NIFTY attempts a breakout from this entire rising channel or continues to just track the upper rising trend line. In any case, though volatile but range bound profit taking bouts cannot be ruled out, the overall intent of the Markets will remain generally bullish. The Markets faces resistance in the 10900-10975 zone and then at 11010 levels.

The Relative Strength Index – RSI on the Weekly Chart is 72.8515 and it has marked a fresh 14-period high which is bullish. It does not show any divergence against the price. The Weekly MACD is bullish as it trades above its signal line. A white candle that emerged shows that the steady upward pattern is bullish.

The pattern analysis shows NIFTY testing the upward rising trend line of the 24-month long channel that it has formed. It would be important to see if the NIFTY attempts to break out of that channel or simply keeps tracking the trend line posting marginal highs amid volatile consolidation.

Overall, the lead indicator like RSI is seen breaking out of a pattern which is bullish. Further, the NIFTY has closed above the upper Bollinger Band on both Daily and Weekly Charts. This portrays great possibility of the uptrend continuing but the overbought nature of the lead indicators will require Market participants to also remain vigilant at higher levels.

A study of Relative Rotation Graphs – RRG show that PSU Banks have continued to slow down on when seen on a weekly note. However, this week, we may see them consolidate and attempting to regain some momentum. MEDIA, REALTY, SERVICE Sector stocks along with FMCG may attempt to find base and relatively out-perform the benchmark. METAL, on week-to-week basis may pose no major show but might attempt to consolidate its position. No major action is expected from PHARMA and Public Sector Enterprises. Broader Indices may lose some momentum adding volatility into the trade. However, some stock specific out-performances may remain.

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, January 19, 2018

MARKET OUTLOOK FOR FRIDAY, JAN 19, 2018

MARKET OUTLOOK FOR FRIDAY, JAN 19, 2018

The Markets had an extremely volatile session on Thursday as the benchmark NIFTY50 gave up nearly 100-odd points from the high point of the day to end the day with modest gains of 28.45 points or 0.56%. Though the Markets saw a gap up opening and scaled yet another life-time peak, it also tested its 24-month long trend line of a rising channel on the Weekly Charts from which it reacted. We expect a tepid start to the day tomorrow. Though there are signs of some tiredness in the Markets, we do not see any significant decline but the levels of 10900-mark will act as fierce resistance tomorrow.

The levels of 10865 and 10900 will resist the up move while the supports come in at 10790 and 10775 zones.

The Relative Strength Index—RSI on the Daily Chart is 73.5869 and it has marked a fresh 14-period high which is bullish. RSI trades mildly in overbought territory. The Daily MACD continues to remain bullish while trading above its signal line. A black candle emerged on the Daily Chart. However, in the present context this formation holds no significance.

The pattern analysis show the Markets taking a breather after breaking out from the 10490-mark. However, with the Thursday’s intraday high levels, the NIFTY tested a 24-month long trend line of a rising channel and has resisted there.

All in all, tomorrow and for coming days, though no major downsides are seen, the volatility will definitely remain ingrained in the Markets as they are pushed into some more range bound consolidation. We expect the Markets to resist to the 10900-mark tomorrow and 10900-10975 range for the coming week. As of now there are no signs of any exhaustion of the trend but we are likely to see good amount of volatility remaining ingrained in the Markets. We recommend staying away from creating any major short positions and continue to make select purchases with each volatile corrective dip.