Gemstone Equity Research & Advisory Services

Saturday, March 3, 2018

WEEKLY MARKET OUTLOOK FOR MAR 05 THRU MAR 09, 2018

WEEKLY MARKET OUTLOOK FOR MAR 05 THRU MAR 09, 2018

The Indian Equity Markets had a short week as the Markets remained closed on Friday on account of Holi. This week as well, just like two previous weeks, the benchmark NIFTY Index ended on a flat note heading nowhere. The NIFTY saw itself ending the previous week with loss of 32.70 points or 0.31% on weekly basis. If we analyze previous five weeks, the NIFTY ended the first two weeks with loss off 3% each week. Then the remaining three weeks saw NIFTY closing on a flat note.

As we approach the new week on Monday, it is very much likely that we will see a rough start to the week. The global markets have remained week post Indian Markets closed on Thursday. We are likely to see a weak opening to the trade and there are all chances that we see NIFTY testing its immediate support zone of 10310-10275 on Monday. However, it would be extremely crucial to see how the Indian Markets react to these levels. There are high chances that we see some resilience stepping in if NIFTY tests these levels.

The coming week will see the levels of 10510 and 675 as immediate resistance zone for the Week. Supports come in at 10310 and 10250 levels.

The Relative Strength Index – RSI on the Weekly Chart is 53.9312 and it has marked a fresh 14-period low which is bearish. A Bearish Divergence is also seen as the Weekly RSI has marked a fresh 14-period low while the NIFTY has not done so. Weekly MACD stays bearish while trading below its signal line. No significant formations are observed on Candles.

If we have a look at pattern analysis, we see that NIFTY is currently resting at its 20-Period moving average. If we see a negative start to the trade and the likelihood of which is much higher, NIFTY will see a breach of this support area if the week is ended on a negative note.

Overall, the coming week is likely to remain volatile and bit stormy as well. While we cope with the global weakness there will be two situations that we will be dealing with. First, the very likely possible weak start to the trading week and the volatility that will come with it; and second, the behavior of the Markets vis-à-vis the 10-310-10275 support zones. There are high probabilities that we see Markets behaving in a resilient manner if these supports are tested. We advise Market participants to approach this week on a highly cautious note and avoid any significant exposures. NIFTY has added large number of shorts over past couple of days and this may act as support in event of weakness, if any. We recommend approaching this coming week on a cautious note and remaining light on overall exposures.

A study of Relative Rotation Graphs – RRG this week paints a little tricky picture. IT pack which has remained in leading Quadrant is likely to evidently outperform the general Markets on relative basis. The PHARMA, IT and SERVICES stock are seen losing momentum though may lend support on selective basis. METALS also is likely to see select outperformance but his would remain on highly selective basis as it has faltered on relative Momentum in the week that has gone by. But it is still likely to fare relatively better than other sectors. All other sectors like Auto, BankNifty, Media, NIFTY Next Fifty and other broader Indices are steadily losing on both relative ratio and momentum and are not likely to put up any significant performance. Key performers are likely from IT, and select Metal, Pharma and Services sector 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

Thursday, March 1, 2018

MARKET OUTLOOK FOR THURSDAY,MAR 01, 2018

MARKET OUTLOOK FOR THURSDAY,MAR 01, 2018

The benchmark Index NIFTY50 consolidated on expected lines and did not move out of the congestion zone but the session remained much weaker than expected. However, given the global weakness that we witnessed, the domestic equity markets relatively outperformed the other markets. We have a short week as Thursday remain the last trading day of the current week with Friday being a trading holiday. We expect this weakness to persist and consolidation to continue. However, we also strongly expect the 100-DMA to continue to hold on as support at Close levels. No downsides beyond this are expected.

Going into trade on Thursday, the levels of 10535 and 10590 will act as immediate resistance for the Markets. The supports come in at 10450 and 10435 zones.

The Relative Strength Index – RSI on the Daily Chart is 45.3143 and it remains neutral showing no divergence against the price or any failure swing. The Daily MACD still remains bearish though it continues sharply narrow its trajectory and moving towards positive crossover in immediate short term. A falling window occurred on Candles. This is a gap down and usually implies persistence of the downtrend. However, this cannot be read singularly. Given the fact that it is very near to the important support of 100-DMA, it can have limited negative impact.

If we look at pattern analysis, it is clear that the NIFTY still remains in the congestion zone that it has created for itself. It will break out of this zone only after it moves past 10590-mark. Until this happens, it is likely to remain in this zone while trading above its critical supports.

All in all, so long as the NIFTY remains in this congestion area, it will stay at the mercy of its immediate support zone of 10276-10310. However, before that there is 100-DMA which stands at 10437 that it is very much likely to defend. We do not see any likely breach of any of these critical support areas. Apart from banks which will remain largely affected by news flow, we will continue to see bottom fishing in good quality stocks. With no critical supports yet broken, we recommend avoiding shorts and keeping overall exposures at modest levels.

STOCKS TO WATCH:

Resilient technical set up is seen in stocks like ASIAN PAINTS, HEXAWARE, OMAXE, EIH LIMITED, SIEMENS, MAX VENTURES, TV18 BROADCAST, FUTURE LIFESTYLE, BHARAT BIJLEE, DBCORP and KALPTARU POWER.