Gemstone Equity Research & Advisory Services

Saturday, June 23, 2018

WEEKLY MARKET OUTLOOK FOR JUN 25 THRU JUN 29, 2018

WEEKLY MARKET OUTLOOK FOR JUN 25 THRU JUN 29, 2018

In our previous Weekly note, we had mentioned about the critical importance of the 10820-10850 zones and likelihood of volatility creeping into the Markets. Much on the expected lines, NIFTY struggled throughout the week to move past this resistance zone of 10820-10850 levels but still ended in between these critical levels. In the meantime, all throughout the week, it continued to resist to this important pattern resistance area. NIFTY ended the week absolutely flat with negligible gains of 4.15 points or 0.04% on weekly basis.

We approach expiry in the coming week and we expect the week to remain dominated with rollover centric activities. Though the NIFTY has fiercely attempted to move past this the resistance zone, it still rules below the 10850-mark. This level, therefore, remains critical for the coming week as well. It would be important for NIFTY to breach this level on the upside for any meaningful up move. Unless this happens, it remains vulnerable to slip into some more consolidation.

Coming week will see the levels of 10890 and 10985 as immediate resistance area. Supports come in lower at 10760 and 10675 zones.

The Relative Strength Index – RSI on the Weekly Chart is 60.8638. It shows no failure swings but shows a mild bearish divergence. This is because RSI has not formed a fresh 14-period high while NIFTY reported a fresh 14-period closing high. However, it is seen attempting to break out of a pattern. Weekly MACD stays bullish while trading above its signal line. A pattern resembling to a Hanging Man occurred on NIFTY. Since this has occurred after a pullback, we might see some stalling of up move in NIFTY. However, this needs confirmation.

Overall, NIFTY still is yet to move past the pattern resistance. This pattern resistance comes in form of a falling trend line which joins the high of 11170 with the subsequent lower tops. Though likelihood of NIFTY breaking out above this pattern resistance is quite high, but until it actually moves past and closes above 10850-mark, we cannot take NIFTY as completely out of the woods. We recommend avoiding shorts and keep overall exposure at modest levels. While extremely selective buying may be done, a cautious approach with a tinge of optimism is what is advised for the coming week. Before taking any major directional call, a confirmation to this attempt of moving past the pattern resistance should be awaited.

A study of Relative Rotation Graphs – shows that BANKNIFTY has continued to relatively outperform the general Markets and the PSU Bank pack has continued to further improve its relative momentum. The coming week will see relatively better performance from the BANK NIFTY, PSU Banks to some extent. The Financial Services pack along with Services sector is likely to relatively outperform. Stock specific performance is also likely from FMCG Pack. Though it remains in leading quadrant, it is seen losing its momentum. No improvement on the momentum front is seen in broader Indices like CNX100, 200 and 500 along with NIFTY JR., and NIFTY MIDCAP universe. REALTY might see some individual performances. No major show is expected from AUTO and METAL Pack. PHARMA is likely to remain strong and improve its relative out performance.

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, June 22, 2018

MARKET OUTLOOK FOR FRIDAY,JUNE 22, 2018

MARKET OUTLOOK FOR FRIDAY,JUNE 22, 2018

The Indian Equity Markets had a disappointing session on Thursday as it opened on a mildly positive note but spent most part of the session in an extremely narrow range. The Index slipped further in the last hour of the trade and ended the day with modest losses of 30.95 points or 0.29%.

The session remained without any directional bias but NIFTY continued to remain in its present pattern and also continued to resist to its present pattern resistance zones. As we approach Friday, we once again expect a quiet start to the day but also expect the pattern resistance zone of 10820-10850 to remain very much in force. NIFTY has to rule out any exceptional move unless these levels are breached on the upside.

Friday will see the zones of 10810 and 10830 playing out as immediate resistance area for the Markets. Supports come in at 10720 and 10660 levels.

The Relative Strength Index – RSI on the Daily Chart is 52.1682 and it stays neutral showing no divergence against the price. The Daily MACD stays bearish as it trades below its signal line. On the Candles, a big black candle occurred. In the present context, it remains important as it occurred near the pattern resistance area for the NIFTY. This reinforces credibility of the pattern resistance to which NIFTY resisted.

Pattern analysis shows that NIFTY continues to remain in a broad symmetrical triangle pattern and is moving towards its apex with each passing day. On the upside, the NIFTY continues to resist to the falling trend line which joins the high of 11171 to the subsequent falling tops

Overall, NIFTY is still not out of the woods even if it continues to move in a narrow range. It would be critically important for the NIFTY to resolve the present pattern with a move on either side. Unless this happens, the zones of 10820-10850 still continue to remain critical and important pattern resistance area for the Markets. Unless a resolution to this pattern is achieved, we recommend remaining moderate on the overall exposures and continue to vigilantly guard profits at higher levels.

STOCKS TO WATCH:

Selective longs were seen being added in ICICI BANK, TATA MOTORS, HDFC, RELIANCE, SUN TV, INFOSYS, BHEL, INDIAN OIL, HIND PETRO, BERGER PAINT, CG POWER, TATA POWER, ARVIND, LIC HOUSING, ENGINEERS INDIA, CASTROL and ZEE ENTERTAINMENT.