Gemstone Equity Research & Advisory Services

Friday, June 15, 2018

WEEKLY MARKET OUTLOOK FOR JUN 18 THRU JUN 22, 2018

WEEKLY MARKET OUTLOOK FOR JUN 18 THRU JUN 22, 2018

The previous weekly note discussed about the likelihood of the NIFTY attempting to move past its falling trend line resistance which joins the lower tops. In the Week that went by, the benchmark Index struggled all throughout the week in attempting to move past this pattern area resistance though it made no clear headway on the upside. The pullback that was seen on the last trading session of the week saw the benchmark index NIFTY closing week with a weekly gain of 50.05 points or 0.46%.

The coming week is likely to remain critical. The zones of 10820-10850 will continue to remain critical and in the same breath, we will see NIFTY attempting to move past the pattern resistance of this falling trend line which joins the lower tops. The coming week will also see some volatility creeping in the Markets though the undercurrent is likely to remain buoyant.

Next week will see the levels of 10890 and 10975 acting as immediate resistance levels for the Markets. Supports come in at 10765 and 10660 zones.

The Relative Strength Index – RSI on the Weekly Chart is 60.7579. The NIFTY has set a fresh 14-period high while the RSI has not and this has resulted into bearish divergence. However, in the present context, though this may restrict and resist the immediate up move but RSI is also seen trying to breakout from a pattern formation. The Weekly MACD is bullish as it trades above its signal line. No significant formations were observed on Candles.

Overall, the next week is likely to remain critical for the Markets as moving past the pattern resistance of a trend line joining a probable lower top is critically important for the Markets. We expect the Markets to remain overall range bound. The F&O data suggests that the range might get little broader but the downsides will certainly remain capped and limited. The coming week is likely to see highly stock and sector specific moves. We recommend continuing to guard profits vigilantly at higher levels. Shorts should be avoided as the undercurrent still continues to remain comfortably buoyant unless some critical supports are breached.

A study of Relative Rotation Graphs – shows that PSU banks have further improved on the relative momentum front and are expected to continue this trajectory in the coming week as well. Along with this, the Bank NIFTY pack has moved into the leading quadrant and is expected to relatively outperform. It is likely to get company from Financial Services, Services sector who are also expected to relatively out-perform. FMCG pack is likely to do well but performance may remain stock specific. Apart from this, PHARMA too are seen improving on the relative momentum front. Broader Indicess like CNX 100, CNX 200 and CNX 500 continue with its falling trajectory and this may keep any runaway up move in the general markets in check. AUTO, NIFTY Midcap Universe, Small Caps, NIFTY Next 50 too are seen continuing to deteriorate on the momentum front. No show is expected from the Media pack. IT and Realty may see sporadic out performances.

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, June 14, 2018

MARKET OUTLOOK FOR THURSDAY,JUNE 14, 2018

MARKET OUTLOOK FOR THURSDAY,JUNE 14, 2018

In the Wednesday’s session, NIFTY made a half-hearted attempt to move past the 10850 mark which has been posing critical resistance to the Markets. In a session that remained largely range bound and capped on the upside, the NIFTY came off from the high point of the day and settled with minor gains of 13.85 points or 0.13%.

We expect a quiet start to the day but just like the previous session, the levels of 10,850 and the behavior of the Markets vis-à-vis this level needs to be critically watched. NIFTY will have to move past this level in a convincing manner for any meaningful up move to occur. If it faces resistance at higher levels just like it happened in the previous session, it is likely to be pushed into some more consolidation.

Thursday will see the levels of 10890 and 10945 as immediate resistance levels. Supports come in lower at 10810 and 10760 zones.

The Relative Strength Index – RSI on the Daily Chart is 63.0384 and it has reached marked its highest value in last 14-days which is bullish. It does not show any divergence against the price. Daily MACD stays bullish while trading above its signal line. Apart from black body that occurred on Candles, no significant formations were seen.

Going by the pattern analysis, it is seen that NIFTY is making attempts to move past the pattern resistance that exists in form of falling trend line that emerges from 11170 and subsequently joins the falling tops.

F&O data and lead indicators exhibit strong undercurrent and buoyant intent of the Markets. There are chances that though we might see some corrective swings given the current structure of the Markets, eventually it is expected that the NIFTY is likely move past 10850-mark which has been posing important pattern resistance to the Markets. We are also likely to see some volatility persisting in the trade but overall session is likely to remain range bound with limited downsides and underlying buoyant intent. While still continuing go guard profits at higher levels, selective purchases may be continued.

STOCKS TO WATCH:

Good technical set up is observed in stocks like JSW STEEL, STATE BANK, RELIANCE, ICICI BANK, YES BANK, AXIS BANK, EXIDE, POWERGRID, INDIA CEMENTS, M&M and TATA MOTORS.