Gemstone Equity Research & Advisory Services

Saturday, February 10, 2018

WEEKLY MARKET OUTLOOK FOR FEB 12 THRU FEB 16, 2018

WEEKLY MARKET OUTLOOK FOR FEB 12 THRU FEB 16, 2018

Just like the previous week, this week also ended on a dismal note with the benchmark NIFTY50 ending with net loss of 305.65 points or 2.84%. The week before this had also seen the Index losing 309.05 points. Therefore, the two weeks that have gone by have seen NIFTY shaving off 614-odd points. The reasons that we can attribute to this were, however, different. Earlier, we had Union Budget and the introduction of LTCG to blame. But this time, it was pure global technical selloff that caused the damage. However, in the same breath, it would be important to note that the Indian Markets remained distinctly resilient and we outperformed the global peers who lost nearly 10%.

Going into next week, we have just four working sessions with Tuesday, 13^th being a trading holiday. This truncated week is likely to see the levels of 10750 resisting the upside. The downsides will have strong support at the previous week’s low of 10276. We will see volatility refusing to go away as well.

The Relative Strength Index – RSI on the Weekly Chart is 54.0688 and it has marked a fresh 14-week low which is bearish. Also, a bearish divergence is observed as the Weekly RSI has set a fresh 14-week low while the NIFTY has not done so. The Weekly MACD has reported a negative crossover and it is now bearish while trading below its signal line. A falling window occurred on Candles. This is usually a gap on the downside and usually implies continuation of some downsides. But this requires confirmation and should not be read singularly.

The pattern analysis shows the NIFTY sharply correcting after attempting to break out of a 24-month long upward rising channel. Presently, it has continued to stay within this 24-month long trading channel and has not broken out. Apart from this, it shows no structurally breach on the Weekly Charts.

All in all, while we go ahead into the trade in a truncated week, we do not see any runaway pullback happening. However, at the same time, we also do not see the Markets breaching the previous weekly lows of 10276 as well. However, this reading will hold true only if we read the domestic technical factors in isolation. But there is always a caveat. We will not remain unaffected if the global selloff continues. But one thing is for sure that we will remain much more resilient to the global weakness, if any. NIFTY has shown all signs of successfully forming a base in the near term and will see select sectors distinctly out-performing the general Markets.

A study of Relative Rotation Graphs – RRG shows that despite remaining in the Weakening quadrant, the METAL pack is likely to gather strength and attempt relative out-performance in the coming week. REALTY, MEDIA, and MIDCAP are seen losing momentum rapidly despite remaining in the leading quadrant. We are likely to see FMCG, SERVICES, PHARMA and IT continue to remain resilient and relatively outperform. We do not see any notable performance coming in from other sectors like PSE, BANKNIFTY, FINANCIAL SERVICES, along with broader Indices. INFRA pack may positively consolidate.

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, February 9, 2018

MARKET OUTLOOK FOR FRIDAY, FEB 09, 2018

MARKET OUTLOOK FOR FRIDAY, FEB 09, 2018

Thursday’s session remained on the expected lines as the benchmark NIFTY did enjoy a strong opening and also fiercely attempted to find and maintain base around current levels. Though the NIFTY retraced nearly 100-points from the high of the day, it recovered again and ended the session with a decent gain of 100.15 points or 0.96%. NIFTY has successfully defended its 50-DMA at Close levels as of now and has also maintained itself above the 10480-500 zones keeping hopes of a recovery alive.

We expect a positive opening once again on Friday. The intraday corrective move that was witnessed on Thursday put and the recovery that followed makes the base stronger for the Markets under usual circumstances. The levels of 10635 and 10680 will play out as immediate resistance levels while the supports will come in at 10480 and 10410 mark.

The Relative Strength Index – RSI on the Daily Chart is 41.7223 and it stays neutral showing no divergences against the price. The Daily MACD stays bearish as it trades below its signal line but it may flatten its trajectory in coming days if downsides get arrested. No significant formations were observed on Candles.

While having a look at pattern analysis, it is evident that the NIFTY pulled back sharply after intraday lows that tested the 100-DMA. At Close levels, it has defended both 100-DMA and 50-DMA as well.

Overall, we still feel that volatility may continue to persist for some time. However, select sectors have already started to outperform on expected lines and will continue to do so on Friday as well. Also it is important to note that the intraday corrections and the recovery from that make the Markets healthier and light in terms of open positions. We expect that the Markets may attempt some more upsides with the only caveat that the levels of 10500 should be defended. Any breach of this level will bring in temporary weakness.

We recommend keeping overall exposures moderate until the Markets restores its upward directional bias.