Gemstone Equity Research & Advisory Services

Saturday, March 17, 2018

WEEKLY MARKET OUTLOOK FOR MAR 19 THRU MAR 23, 2018

WEEKLY MARKET OUTLOOK FOR MAR 19 THRU MAR 23, 2018

In our previous Weekly Note, we had mentioned that the Markets remain on tenterhooks and it would be extremely crucial for the NIFTY to remain above the crucial 10275-10300 pattern supports. The session on Friday wiped out the gains in its entirety and the benchmark NIFTY ended the week with a net loss of 31.70 points or 0.31%. Looking at this Weekly figure, it does not suggest any serious weekly loss but the manner in which the volatility ruled the roost all through the week; this certainly remains a cause of worry for the Markets.

While we approach the coming week, we brace ourselves to deal with two very critical and crucial levels. One is the 200-DMA on the Daily Charts which stand at 10161 and two; we also approach the 27-month long upward rising trend support line which stands at 10000-10040 range. This also coincides with the 50-Period Moving Average on the Weekly Chart which stands at 10024.

With the kind of sentimental damage that we are groping with off late, we do not completely rule out some more intermittent selling bouts, but we also believe the zones of 10040-10160 to act as rock-solid support are and we do not expect this support zone to be easily and comprehensively broken. On the upside, NIFTY faces resistance at 10300 and 10390 zones.

The Relative Strength Index – RSI on the Weekly Chart is 46.3042 and it has marked its lowest value in last 14-weeks which is bearish. Daily MACD stays bearish while trading below its signal line. No significant observations were observed on Candles.

If we have a look at pattern analysis, NIFTY still remains inside the 27-month long upward rising channel. The lower rising trend line – the support line remains in very close vicinity of the current value of NIFTY and is expected to act as a strong pattern support for the NIFTY.

We also need to review the present technical situation of NIFTY from a different perspective. Though however strong support that the zone of 10040-10160 may provide to the NIFTY, any breach of these levels will see some prolonged pain getting initiated in the Markets. However, also looking at the present set up and the F&O data, such significant breach below the mentioned support seems unlikely at present. By the time Markets find support for itself, we reiterate staying away from creating any major positions while continuing to adopt a very cautious view on the Markets.

A study of Relative Rotation Graphs – RRG this week show that the IT Pack has shown resilient behavior and this week as well is likely to out-perform NIFTY on relative basis. Along with this, it would also be safe to take refuge in sectors like FMCG, Services Sector, Financial Services, BankNIFTY to some extent and ENERGY who are seen improving their relative momentum against the general markets. Apart from this, very select stocks from Media and METAL pack might see good performance. Apart from this, we do not expect any eye-caching performance from AUTO, INFRA, PHARMA, SMALL CAP Universe, PSEs and REALTY pack.

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, March 16, 2018

MARKET OUTLOOK FOR FRIDAY, MAR 16, 2018

MARKET OUTLOOK FOR FRIDAY, MAR 16, 2018

The session on Thursday turned out to be much on expected lines as the NIFTY headed nowhere for the major part of the trade while remaining in much capped range. However, end of the session remained little sluggish than expected as the NIFTY ended the day with net loss of 50.75 points or 0.49% while adding fresh short positions.

Overall, we will continue to see the Markets continuing to consolidate and spend some more time remaining subdued before it prepare itself to move past 100-DMA levels. We are expected to see quiet to mildly positive start to the trade on Friday. However, NIFTY is neither expected to move past 100-DMA nor it is likely to breach any major support area.

Friday will see the levels of 10395 and 10475 playing out as immediate resistance levels. Supports come in at 10345 and 10275 zones.

The Relative Strength Index – RSI on the Daily Chart is 44.8813 and it continues to remain neutral showing no divergence against the price. The Daily MACD stays bullish as it continues to trade above its signal line. No significant formations were observed on Candles.

Pattern analysis reveals the credibility of the resistance area of 100-DMA as the NIFTY has resisted at those levels. Also it shows and has established the support zone of the 10275-mark followed by the 200-DMA of the Markets. Presently it continues to trade in a rectangle formation which translates into a broad trading range.

All and all, it is all likely that the NIFTY continues to oscillate and consolidate a bit more before it prepares for a fresh up move. In this process, the support of 10275-mark will be critical area to watch for. The F&O data which continues to show addition of shorts reiterates the limited downsides for NIFTY. Also, taking into account the performance of the broader indices and sector indices, it is evident that the Markets continue to exhibit positive bias. We reiterate avoiding shorts in the present scenario. Minor downsides cannot be ruled out but overall, this will be nothing more than some more consolidation which is ultimately likely to resolve itself with a directional bias on the upside.

STOCKS TO WATCH:

Fresh long positions were seen being added in stocks like IDFC BANK, COAL INDIA, RECLTD, DLF, ICICI BANK, L&TFH, ARVIND, NATIONAL ALUMINIUM, ASIAN PAINTS, EQUITAS, RPOWER and INFRATEL.