Gemstone Equity Research & Advisory Services

Saturday, February 17, 2018

WEEKLY MARKET OUTLOOK FOR FEB 19 THRU FEB 23, 2018

WEEKLY MARKET OUTLOOK FOR FEB 19 THRU FEB 23, 2018

The last trading day of the Week saw the NIFTY taking a cut ending the day with net loss of 93.20 points or 0.88% on Friday. This has seen the benchmark Index ending the Week on a flat note losing just 2.65 points or 0.03% on weekly basis. Markets have decoupled themselves from the global markets but for the wrong reasons only when we saw stability returning in the global markets. Though we can take solace that fall in our Markets is arrested as we ended flat after losing 3% in each of the two previous weeks. But at the same time, we have grossly underperformed the global peers.

The most correlated Market – Hang Seng – ended the Week gaining 5.45%. Dow ended the Week gaining 4.25%. Nasdaq and S&P500 gained 5.31% and 4.30% respectively on a weekly note. The hit that the domestic Index took was much of sentimental nature. We have lot of catching up to do this coming week.

Subject to global markets remaining stable, we see Indian Markets approaching the week on a positive note and we may see stability returning to our Markets. The levels of 10750 will act as immediate resistance while supports will come in at 10250-10300 zones.

The Relative Strength Index – RSI on the Weekly Chart is 53.9947 and it has marked a fresh 14-period low which is bearish. It also shows bearish divergence as RSI has marked a fresh 14-period low while the NIFTY has not done so. Weekly MACD is bearish as it trades below its signal line. No significant formations were seen on Candles.

While having a look at pattern analysis, NIFTY is seen resting at the 20-period Moving Average on the Weekly Charts. Volumes are seen reducing each following week and this shows that selling is now trying to slow down and NIFTY still remains in the process of finding a bottom for itself.

We also approach the expiry of the current derivative series in the coming week. This will also see volatility remaining in the Markets but unless a fresh skeleton drops out of a cupboard, there are high chances of the Markets attempting to find bottom at current levels. However, until a confirmation is achieved, we will still recommend staying put with strategy of maintaining modest exposures while avoiding shorts and protecting profits at higher levels.

A study of Relative Rotation Graphs – RRG shows that PHARMA stocks are steadily improving the relative performance and along with that, the IT pack is likely to distinctly out-perform the general markets. Apart from this, Metal stocks are showing stark improvement on both ratio and momentum and are likely to continue to strengthen its position and attempt to relatively outperform. FMCG too may perform week but some drop in momentum is observed. Apart from this, REALTY, NIFTY Next 50, and other broader Indices are seen losing momentum. No major show is expected from PSUBanks, BANKNIFTY, Public Sector Enterprises, ENERGY and INFRA pack. Some minor stock specific out-performances may be seen in Media stocks.

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 16, 2018

MARKET OUTLOOK FOR FRIDAY, FEB 16, 2018

MARKET OUTLOOK FOR FRIDAY, FEB 16, 2018

Markets had a session defined with limited range on Thursday. The benchmark Index NIFTY50 enjoyed a modestly positive start and in the late morning trade inched higher. The 50-DMA acted as resistance for the Markets as the NIFTY came off from its highs and ended the day with modest gain of 44.60 points or 0.42%. There was no volatility as such but currently the NIFTY remains trapped in between its 50-DMA and the 10480-10500 support zone which is followed by 100-DMA on the downside.

Going into trade on Friday, we continue to expect a modestly positive and quiet start to the trade. Just as we mentioned in our earlier note, the behavior of the Markets vis-à-vis the 10480-10500 zone would be important to watch for. NIFTY will have to remain above the 10500 mark to avoid any more weakness from creeping in. Presents, the NIFTY trades without any directional bias post recent corrective declines.

The levels of 10580 and 10635 will act as immediate resistance levels for the Markets. Supports will come in at 10480 and 10410 zones.

The Relative Strength Index – RSI on the Daily Chart is 43.2847 and it remains neutral showing no divergence against the price. The Daily MACD stays bearish while trading below its signal line. No significant formations occurred on Candles.

Pattern analysis reveals little uneasy picture as the Markets are just managing to hang on above the 10480-10500 support zone. It is important to remain above this level as any breach of this support zone will increase the possibility of the NIFTY testing the 100-DMA levels.

Markets are exhibiting tentative approach and we need to address this situation with some caution. Until the NIFTY stays comfortably above the 10480-10500 zones and gradually moves past 50-DMA which is currently at 10584, it will remain vulnerable to profit taking bouts from higher levels. We reiterate our advice to tread the Markets with caution, and avoid taking lopsided exposures with either directional bias. They way dips should be utilized to make quality purchases, profits too need to be guarded at higher levels until a confident directional bias is established again.

STOCKS TO WATCH:

Long positions were seen being added in STATE BANK OF INDIA, YES BANK, ICICI BANK, ASHOK LEYLAND, ITC, POWERGRID, VEDANTA, EQUITAS and INFIBEAM. Unwinding was seen on counters like RPOWER, SYNDICATE BANK, SOUTH BANK, GMRINFRA, RELIANCE CAPITAL, CANFIN HOMES, ESCORTS and ADANI ENTERPRISES.