Gemstone Equity Research & Advisory Services

Saturday, March 24, 2018

WEEKLY MARKET OUTLOOK FOR MAR 26 THRU MAR 30, 2018

WEEKLY MARKET OUTLOOK FOR MAR 26 THRU MAR 30, 2018

While the global markets reacted bitterly in what is seen as a trade war initiated by US mainly targeting Chine, the Indian Markets too ended the week on a weaker note. The benchmark NIFTY ended the week with a net loss of 197.10 points or 1.93% on a weekly basis.

The ending of this week has left us hanging in a precarious manner. On one hand, the lead oscillators points towards Markets dealing with oversold zones, there is also a potential minor breach of the 27-month long upward rising channel that the NIFTY has been trading in since the beginning of 2016.

Coming week remains short week with Thursday and Friday being trading holidays. Nevertheless, it remains extremely tricky as well. We head into expiry of the current derivative series in this short week on Wednesday. Though NIFTY may struggle to pullback a bit, the levels of 200-DMA have established themselves as a major resistance area for the Markets to conquer. The zones of 9980-9920 will continue to offer important support. There are possibilities that the NIFTY attempts a minor pullback but the week surely promises to remain tricky.

The Relative Strength Index – RSI on the Weekly Charts is 41.2805 has reached the lowest value in last 14-period which is bearish. However, it does not show any divergence against the price. The Weekly MACD stays bearish while trading below its signal line. No major formations were observed on Candles.

The pattern analysis of the Weekly Charts shows two important things. First, the NIFTY has slightly breached the 27-month long upward rising channel. Though the breach as of now is not a major one, but it certainly remains an important one. On the other hand, the NIFTY is seen taking support on the 50-Period Moving Average on the Weekly Charts. NIFTY had move above this 50-Period Moving Average in early 2017and had never tested it since then.

All in all, the conclusion that we can draw from this is that the NIFTY though has shown a minor breach on the Weekly Charts, there are still chances of it finding stability subject to some stability in the global Markets. However, given the shorter week, we do not see any runway up move or a pullback in the Markets. Avoiding fresh positions, preserving cash and approaching markets with great caution is what is advised for the coming week.

A study of Relative Rotation Graphs – RRG this week show that there are not much places left to hide. However, we expect resilient performance from pockets of IT, Financial Services, Services and FMCG pack. Also, isolated out-performances may come from NIFTY Junior, and ENERGY universe. Apart from this, no major relative out-performances are expected this week.

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 23, 2018

MARKET OUTLOOK FOR FRIDAY, MAR 23, 2018

MARKET OUTLOOK FOR FRIDAY, MAR 23, 2018

Corrective undertone continued to persist as the Indian Equities continued with its modest slide. The benchmark index NIFTY failed to sustain once again above 200-DMA after enjoying a modestly positive opening and finally ended the day with modest loss of 40.50 points or 0.40%. The session continued to remain volatile but also remained in a capped range.

As we approach Friday, the analysis remains once again on similar lines. The NIFTY has resisted to the 200-DMA which stand at 10171 now and unless NIFTY moves past this level, this level will continue to pose a resistance to the Markets at Close levels.

We are expected to see a quiet opening once again. However, the levels of 10170 and 10135 will continue to offer strong resistance area for the Markets. Supports continue to remain at 10040 and 9980.

The Relative Strength Index – RSI on the Daily Chart is 36.4130 and this continues to remain neutral showing no divergence against the price. Daily MACD stays bearish while it trades below its signal line. No significant formations were observed on Candles.

Having a look at pattern analysis, it is seen that the NIFTY dipped below the 200-DMA at Close and while attempting to pullback, this level has offered a stiff resistance. Any pullback will be seen only after the NIFTY moves past and closes above the 200-DMA.

Having said this, the oscillators have begun to turn upwards for the Index on the Daily Charts while being still oversold on the Weekly Charts. The level of 10040 will continue to offer a strong pattern support for the Markets. However, it would s till remain important to note that in spite of any strong opening that the Markets may see at opening of during the session, unless it ends itself above 200-DMA, it will continue to remain vulnerable to sell offs. We continue to recommend approaching markets on a very cautious note until it throws an imminent pullback taking it above 200-DMA at close.

STOCKS TO WATCH:

Good technical set up is observed on counters like BAJAJ FINSERV, CG POWER, VEDANTA, HINDZINC, INDUSIND BANK, IDFC, RELIANCE, TATA POWER, TATA MOTORS, HINDALCO and NTPC.