Weekly Technical View - NIFTY - November 14 thru November 18, 2016

WEEKLY MARKET OUTLOOK FOR 15^th  to 18th  NOVEMBER  2016

Relative volatility continued on Indian bourses as the NIFTY ended with a deep cut on Friday while on week-on-week basis, it ended with a net loss of 137.45 points or 1.63%, though the intra-week band remained quite volatile and wide. Coming week, we  will see our Markets opening on Tuesday as Monday is a trading holiday and NIFTY will have adjustments to make of the Monday’s trade that will take place. Keeping this in view along with major technical indicators, we expect NIFTY to achieve and remain stable while attempting to find base and bottom. The NIFTY had seen a one-way 600-odd point recovery and therefore, what we saw on Friday was profit taking from higher levels. This volatile movement will happen but overall, it is expected that NIFTY will find some bottom in coming week.

For next week, the levels of 8460 and 8525 will act as immediate resistance levels. The supports are expected to come in at 8200 and 8125 levels. This broad range will be the functional range in coming week.

The RSI—Relative Strength Index on the Weekly Chart is 45.2572 and it has reached its lowest value in last 14-periods which is bearish. It does not show any bullish or bearish divergence. The Weekly MACD stays bearish as it continues to trade below its signal line. On Candle, a not-so-classical long lower shadow occurred. Though it does not have its text-book perfect formation, it cannot be ignored as it has appeared during a downtrend. We will require a while candle following week confirming this formation but it certainly throws up potential base formation at current levels.

Coming to pattern analysis, the NIFTY has continued with its weekly decline for the third consecutive week and has remained in a small falling channel drawn from 8968 levels. It has a major support at 8200-mark which is a 100 Week Moving Average and it is expected that this level will hold at Close as its major support.

All and all, as of now, NIFTY has grossly underperformed its peers and speaking purely on technical note, we can fairly expect that the NIFTY will find base around current levels and in event of any downsides the 100-WMA will act as major support at Close levels and recent lows will not be broken. With many of the key NIFTY components showing potential reversals on Weekly Charts, picking key stocks will hold the key for coming days. All dips should be continued to be used for making selective purchases. No panic reaction stands warranted at this stage.

A study of Relative Rotation Graphs – RRG suggest Pharma, Services and FMCG stocks will attempt to find base at current levels while IT stocks are expected to show resilience on week-on-week basis in coming week. Metals will be seen maintaining some momentum while stock specific outperformance will be seen from CNXMID50, Auto and CNXMID stocks. PSU banks are also expected to maintain momentum and remain at lease neutral on week-on-week basis.

 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

Technical Analyst

(Research Analyst, SEBI Reg. No. INH000003341)

Member: 

Market Technicians Association, (MTA), USA

Canadian Society of Technical Analysts, (CSTA), CANADA

Association of Technical Market Analysts, (ATMA), INDIA

www.EquityResearch.asia

http://milan-vaishnav.blogspot.com

+91-98250-16331 

milan.vaishnav@equityresearch.asia

milanvaishnav@yahoo.com

Daily Market Trend Guide -- Friday, November 11, 2016

MARKET TREND FOR FRIDAY, NOVEMBER 11, 2016

Though the equity markets continued with its up move and closed with decent gains, as mentioned in our yesterday’s edition, the 100-DMA of the NIFTY came into play yesterday as the NIFTY resisted at these levels and came off from there before it ended. Today as well, we continue the NIFTY to maintain a positive bias but the levels of 100-DMA which is 8586.40 will still remain a critically important levels to watch out for. NIFTY is likely to resist to this level before it gathers strength to move ahead but if it does so, then it is likely to travel towards its logical targets of 50-DMA levels which rests at 8690.

For today the levels of 8586 and 8635 will act as immediate resistance levels for today. The supports come in at 8510 and 8450 levels.

The RSI—Relative Strength Index on the Daily Charts is 44.7656 and it remains neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD stays bearish as it trades below its signal line. A Rising Window occurred on the Candles. This is essentially a gap, which usually signifies continuing up move.

On the derivative front, the NIFTY November futures have added yet another 3.43 lakh shares or 2.06% in Open Interest. This signifies that fresh longs continued to have been added yesterday as well.

Coming to pattern analysis, the NIFTY fully recovered its breach and a downward breakout from the falling channel that it has formed from 8968 levels. It has remained within a narrowing falling channel but has continued to resist at its 100-DMA as well. This level of 100-DMA which is 8586.40 will act as immediate resistance level at Close for the Markets. Though NIFTY is very much likely to maintain a positive bias, it will consolidate until it moves past its 100-DMA. Once these levels are breached on the upside, logical targets towards 50-DMA levels cannot be ruled out.

All and all, we continue to reiterate our cautiously positive view on the Markets. Caution is advised until the NIFTY moves past 100-DMA because until then, theoretically, it will remain vulnerable to profit taking bouts from higher levels. Once these levels are moved past, we may see the NIFTY continuing with its up move. It is advised to keep utilizing all intermittent downsides to make selective purchases while maintain a cautious optimism in the Markets.

Milan Vaishnav, CMT

Technical Analyst

(Research Analyst, SEBI Reg. No. INH000003341)

Member: 

Market Technicians Association, (MTA), USA

Canadian Society of Technical Analysts, (CSTA), CANADA

Association of Technical Market Analysts, (ATMA), INDIA

www.EquityResearch.asia

http://milan-vaishnav.blogspot.com

+91-98250-16331 

milan.vaishnav@equityresearch.asia

milanvaishnav@yahoo.com

Daily Market Trend Guide -- Thursday, November 10, 2016

MARKET TREND FOR THURSDAY, NOVEMBER 10, 2016

The Markets had a remarkably nasty and extremely volatile session while it recovered over 430-odd points from the low point of the day though it ended the day with losses. We refer to our note yesterday wherein we had categorically mentioned that equity markets will witness extremely volatility while it reacts to US Election outcome but at the same time it will continue to remain guided by broad technicals. Today, as we go ahead in the session, we will continue to see NIFTY resisting to the falling trend line of the channel has broke and then further at 100-DMA levels which is 8583 and a critical level to watch out for.

Today, the levels of 8476 and 8530 will act as immediate resistance levels while supports will come in at 8400 and 8350 levels.

The RSI—Relative Strength Index on the Daily Chart is 36.7232 and it does not show any failure swing.  NIFTY has set a fresh 14-period low but RSI has not and this is Bullish Divergence. The Daily MACD remains bearish while trading below its signal line. A Big While Candle has occurred. Though there is also a gap that has occurred, this while candle has occurred near 200-DMA of the NIFTY which is 8112 and therefore this has lent credibility of this support level over the immediate short to medium term.

On the derivative front, the NIFTY November futures have added over 6.57 lakh shares or 4.10% in Open Interest. This is clear evidence that the huge pullback that we saw from opening lows has not only come in back of heavy short covering but some more longs too seem to have been added.

Coming to pattern analysis, the NIFTY has clearly shown a downward breach from the falling channel that it has formed since 8938 levels. The return line (support line) of the channel will now continue to act as resistance in normal course of business followed further by the 100-DMA. At this juncture, some important and interesting points need to be taken note of. NIFTY, with most of its components and other key stocks have taken support at Close levels either at 100-DMA or its 200DMA speaking on broad terms. Furthermore, so far as electing of Donald Trump is concerned, it is not likely to affect negatively to the Fund Inflows into India. Barring some short term reactions,  all developments will remain in India's favor. First, Trump basically targets China, with regard to mfg jobs, and Mexico and Philippines which take away low tier it jobs from the US. This will negatively impact their economies and Markets in particular and therefore, India stands to remain relatively more favored among Emerging Markets. Also, with Trump coming, we will NOT see interest rate hike in December, mostly.  Further, India and Indonesia are two such countries whose growth is mainly dependent on domestic consumption. They will remain minimally effected by Trump regime in the long run.

All and all, volatility will persist in the short term and while these adjustments happen, we recommend to remain extremely stock-specific and use all volatile downsides to make select purchases. Though some choppiness will remain, the short to medium term is not expected to see any more major downsides. Cautious optimism is advised for the day.

Milan Vaishnav, CMT

Technical Analyst

(Research Analyst, SEBI Reg. No. INH000003341)

Member: 

Market Technicians Association, (MTA), USA

Canadian Society of Technical Analysts, (CSTA), CANADA

Association of Technical Market Analysts, (ATMA), INDIA

www.EquityResearch.asia

http://milan-vaishnav.blogspot.com

+91-98250-16331 

milan.vaishnav@equityresearch.asia

milanvaishnav@yahoo.com

Daily Market Trend Guide -- Wednesday, November 09, 2016

MARKET TREND FOR WEDNESDAY, NOVEMBER 09, 2016

After spending nearly entire session in a very narrow range, the NIFTY ended near high point of the day yesterday while last hour witnessed a sharp up move. Today, as we open, we will see the Markets trading somewhat beyond technicals. Today, while we see bracing ourselves preparing to react to one of the most important international event, Markets are bound to remain volatile and extremely choppy and might witness a gap. By the time the session starts, world will have clear picture of the most likely US Election outcome. Though technical indicators and levels might not hold strictly correct, it might still provide some guidelines on either side as we go into the session.

Today, the levels of 8610 and 8695 will act as immediate major resistance in case if we see any gap up. On the other side, in event of any untoward developments, the 8400 and 8350 will provide important supports. Under normal trade, 8480-8500 mark will provide normal support to the Markets.

The RSI—Relative Strength Index on the Daily Chart is 43.7367 and it remains neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD still remains neutral as it trades below its signal line. A Long Lower Shadow has occurred on the Candles showing possible upsides in case of no untoward developments in the US.

On the derivative front, the NIFTY November futures have shed 57,300 shares or 0.36% in Open Interest. This figure is negligible as no major shorts or longs have been added.

Coming to pattern analysis, NIFTY will see a negative breach from the falling channel if it drops below 8480-mark and well below that. On the higher side, the levels of 8680-8715 continue to remain resistance as NIFTY faces important pattern resistance and 50-DMA as well in that zone. In either case, we are set to see extensive amount of volatility while we go into the trade reacting to the developments in the US.

All and all, we continue to advice to refrain from creating aggressive shorts as good amount of shorts exists in the system. More amounts of cash should be preserved and aggressive exposure should be avoided until we get clear directional bias. Irrespective of the outcome in the US, it would be important to note that give the technical structure of the Markets, except for some knee jerk reactions in coming days, Markets are not likely to deviate much from the overall broad technical indicators.

Milan Vaishnav, CMT

Technical Analyst

(Research Analyst, SEBI Reg. No. INH000003341)

Member: 

Market Technicians Association, (MTA), USA

Canadian Society of Technical Analysts, (CSTA), CANADA

Association of Technical Market Analysts, (ATMA), INDIA

www.EquityResearch.asia

http://milan-vaishnav.blogspot.com

+91-98250-16331 

milan.vaishnav@equityresearch.asia

milanvaishnav@yahoo.com

Daily Market Trend Guide -- Tuesday, November 08, 2016

MARKET TREND FOR TUESDAY, NOVEMBER 08, 2016

The Markets had a critically important session yesterday and though it came off from its intraday highs to end the day a notch below 8500-mark, it ended the day with modest gains. Today, once again, the zone of 8480-8500 will remain critically important level to watch out for. The behavior of the Markets vis-à-vis these levels will decide the trend in coming days. Moreover, caution is expected to weigh in heavily, especially in the second half today as we would brace ourselves to react to US election developments. Speaking purely on technical terms, it would be imperative for the NIFTY to trade above 8500-mark to avoid any further weakness from creeping in again.

For today, the levels of 8520 and 8575, which is the 100-DMA of the NIFTY will act as immediate resistance. The support will come in at 8480 and 8405 levels.

The RSI—Relative Strength Index on the Daily Chart is 39.2559 and it remains neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD remains bearish while it trades below its signal line.

On the derivative front, the NIFTY November futures have shed over 11.67 lakh shares or 6.77% in Open Interest. This makes it very much evident that we have witnessed heavy short covering in the session yesterday. It would be important to see if this also gets replaced with fresh buying.

Coming to pattern analysis, the NIFTY had reported a downward breach from the falling channel that it had formed on Daily Charts from 8968 levels. However, yesterday’s modest gains have put NIFTY back on the verge of the return line which was a pattern support and the support which the NIFTY broke on the downside. Today, and in sessions to come, the levels of 8480-8500 levels will be important to watch out for. It would be imperative for the NIFTY to trade above this mark to avoid more weakness to creep in.

All and all, the behavior of the NIFTY vis-à-vis the 8480-8500 mark will be critical to watch out for. The lead indicators have shown positive inclinations by taking support on the trend lines and any slightest trigger will see the NIFTY attempting to sharply move up as it would cause short covering to continue from current levels as well. However, sustenance below 8475 will keep Nifty vulnerable to continuing weakness and intermittent volatile selling bouts from higher levels. We reiterate heavily cautious view on NIFTY and advise to keep positions and exposure at minimum levels until the NIFTY moves above 8500-mark comfortably and some directional bias is achieved after external events.

Milan Vaishnav, CMT

Technical Analyst

(Research Analyst, SEBI Reg. No. INH000003341)

Member: 

Market Technicians Association, (MTA), USA

Canadian Society of Technical Analysts, (CSTA), CANADA

Association of Technical Market Analysts, (ATMA), INDIA

www.EquityResearch.asia

http://milan-vaishnav.blogspot.com

+91-98250-16331 

milan.vaishnav@equityresearch.asia

milanvaishnav@yahoo.com

Daily Market Trend Guide -- Monday, November 07, 2016

MARKET TREND FOR MONDAY, NOVEMBER 07, 2016

The NIFTY remained in a falling trajectory for the entire session on Friday while the high resisted to the return line of the falling channel that the NIFTY has formed from 8968 levels. While the NIFTY ended yet another day in red, it also showed a clear downward breach from the mentioned falling channel. Today, we can expect a quiet opening in the Markets. We expect that there will be some stability in the initial trade and the Markets may attempt to halt its downsides initially. Some technical pullback cannot be ruled out but overall the NIFTY continues to remain vulnerable to intermittent selling bouts.

For today, the levels of 8465 and 8510 will act as immediate resistance levels for the day while supports will come in at 8405 and 8345 levels.

The RSI—Relative Strength Index on the Daily Chart is 32.4070 and it does not show any bullish or bearish divergence. However, RSI has reached its lowest value in last 14-days which is Bearish. The Daily MACD remains bearish as it continues to trade below its signal line. A Big Black Candle has occurred and since it has occurred near the support area, it has lent some credibility to the downward breach.

On the derivative front, the NIFTY NOVEMBER futures have added over 2.04 lakh shares or 1.20% in Open Interest. The addition in open interest shows some fresh short positions that is being seen in the system.

Coming to pattern analysis, the NIFTY has shown a downward breach from the falling channel that it has formed from 8698 levels. In the Friday’s session, the NIFTY has resisted to the return line after opening below it. It ended much below it confirming a downward breach. Though this may indicate continuing weakness in the immediate short term, the NIFTY is very near to being oversold and this may lend some short term support to the Markets at lower levels. NIFTY will have to move back above 8500 levels in order to avoid any more weakness and remain in a trading range.

All and all, though the overall technical structure remains evidently bearish, some technical pullback at current levels cannot be ruled out. Even if we see some more downside, the nearly-oversold nature of the Markets will certainly lend some support at lower levels. This may result into a technical pullback even if we continue to remain in overall downtrend. Volatility may remain ingrained in the Markets as we prepare ourselves to react to US Elections. We continue to reiterate our advice to remain very light on overall exposure. Maintaining liquidity and cautious view on the Markets is advised for the day.

Milan Vaishnav, CMT

Technical Analyst

(Research Analyst, SEBI Reg. No. INH000003341)

Member: 

Market Technicians Association, (MTA), USA

Canadian Society of Technical Analysts, (CSTA), CANADA

Association of Technical Market Analysts, (ATMA), INDIA

www.EquityResearch.asia

http://milan-vaishnav.blogspot.com

+91-98250-16331 

milan.vaishnav@equityresearch.asia

milanvaishnav@yahoo.com