WEEKLY MARKET OUTLOOK FOR AUG 21 THRU AUG 25, 2017

WEEKLY MARKET OUTLOOK FOR AUG 21 THRU AUG 25, 2017

The Friday’s session saw developments at Infosys weighing heavy but still the benchmark NIFTY50 ended the week on a positive note gaining 126.60 points or 1.30% on Weekly basis. The coming week is once again a short one with Friday being a trading holiday on account of Ganesh Chaturthi. The reading for the coming week remains pretty clear. Neither the Markets see any runway resumption of up move nor will it see any major breakdown. It trades in a broad upward rising channel and will continue to do so trading in a defined range.

The Markets will see the levels of 9950 and 10150 as its immediate resistance levels while supports will come in at 9685 and 9580 levels.

The Relative Strength Index – RSI on the Weekly Chart is 64.0066 and it remains neutral showing no divergence against the price. The Weekly MACD has just turned bearish and it trades below its signal as it has reported a negative crossover.

If we look at Pattern Analysis, we see the Markets trading in a long 18-month upward rising channel. The Markets tested the upper resistance line of this channel and has resisted around this. Even if we see some ranged correction, we will see the Markets trading comfortably in this upward rising channel as evident in the Weekly Chart.

Overall, we see the Markets trading range bound and it is not likely to show any runaway resumption of up move.  Action is likely to remain limited to remain highly sector specific and select pockets will show outperformance in the Markets. We recommend not getting carried away with any sharp up move and use all dips, if any, to make select purchases. Shorts should be avoided.

A study of Relative Rotation Graphs – RRG tells that ENERGY stocks will now start showing relative out performance against the NIFTY. We will also see continued out-performance in METAL Stocks. IT and PHARMA are likely to struggle to consolidate and are expected to remain range bound in coming week. Apart from this, we will see broader Indices like NIFTYJR, CNX100 to improve as well. Not much is expected from REALTY. BANKNIFTY is likely to see loss of momentum and underperformance can be expected from MEDIA stocks.

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, is Consultant Technical Analyst at Gemstone Equity Research & Advisory Services, Vadodara. He can be reached at milan.vaishnav@equityresearch.asia

Milan Vaishnav, CMT

Technical Analyst

(Research Analyst, SEBI Reg. No. INH000003341)

Member: 

Market Technicians Association, (MTA), USA

Canadian Society of Technical Analysts, (CSTA), CANADA

www.EquityResearch.asia

http://milan-vaishnav.blogspot.com

+91-98250-16331 

milan.vaishnav@equityresearch.asia

milanvaishnav@yahoo.com

MARKET OUTLOOK FOR FRIDAY, AUG 18, 2017

MARKET OUTLOOK FOR FRIDAY, AUG 18, 2017

The Markets headed nowhere on Thursday and oscillated in a capped range as the benchmark NIFTY50 ended the day with minor gain of 6.85 points or 0.07%. Very much on expected line, the NIFTY did test its short term 20-DMA and consolidated around those levels moving back and forth in a defined range. The Markets have shown a great underlying strength and on Friday, we expect the Markets to most probably resume its up move and attempt to move past the 20-DMA. If not, then we will see it consolidate with positive bias. Moving past 20-DMA will induce some more strength to the Markets.

The levels of 9960 and 9995 will act as resistance levels while supports to the Market will come in at 9865 and 9810 levels.

The Relative Strength Index – RSI on the Daily Chart is 51.4000 and it remains neutral showing no divergences against the price. The Daily MACD has flattened its trajectory and may move towards positive crossovers in coming days. No major formations were observed on Candles.

The pattern analysis depicts the Markets remaining comfortably within the upward rising channel. The pullback has halted near the short term 20-DMA and we will see the Markets attempting to move past it once again.

The NIFTY August futures have seen addition of over 13.99 lakh shares or 5.93% in Open Interest. There are large positive build up in the system and the previous couple sessions have traded with inherently buoyant bias. In even of any consolidation, we would recommend strictly avoiding any short positions. Any consolidation or any minor collective move should be utilized to make fresh purchases. While remaining heavily stock specific, 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

www.EquityResearch.asia

http://milan-vaishnav.blogspot.com

+91-98250-16331 

milan.vaishnav@equityresearch.asia

milanvaishnav@yahoo.com

MARKET OUTLOOK FOR THURSDAY, AUG 17, 2017

MARKET OUTLOOK FOR THURSDAY, AUG 17, 2017

As analyzed in our previous note, the Markets not only continued with their up move but also saw the shorts being covered up and being replaced with fresh longs. The benchmark NIFTY50 saw a decent rally on Wednesday and ended the day with net gains of 103.15 points or 1.05%. In all likelihood, the Markets will continue with their up move on Thursday as well. Barring some consolidation, if at all if there is any, the Markets will be seen attempting to test the 20-DMA levels and will probably try to move beyond that. A buy signal on Stochastic has also emerged on Daily Charts with a bullish divergence in the direction of the major trend.

The levels of 9950 and 9985 will see acting as immediate resistance levels. Supports are likely to come in at 9840 and 9810 zones.

The Relative Strength Index – RSI on the Daily Chart is 50.9435 and it remains neutral showing no divergence. The Daily MACD remains bearish while trading below its signal line but it is sharply narrowing its trajectory.

The Wednesday’s up move has come in with an addition of over 2.60 lakh shares of 3.3% in NIFTY Futures of the current month. This shows that not only the shorts were covered but 

they were replaced with fresh longs as well.

The pattern analysis shows that the Markets have firmly taken support at the lower support line of the channel that it has been trading in. This support also coincide with the 50-DMA and therefore this zone has now reinforced itself as a major pattern support for the Markets.

Though we not see Markets racing towards new highs but we can certainly expect the Markets to continue with the up move from current levels. It is likely to test 20-DMA and might consolidate there. We recommend strictly avoiding shorts and continue to make modest purchases with any minor corrective decline that is seen. Positive outlook 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

www.EquityResearch.asia

http://milan-vaishnav.blogspot.com

+91-98250-16331 

milan.vaishnav@equityresearch.asia

milanvaishnav@yahoo.com

MARKET OUTLOOK FOR WEDNESDAY, AUG 16, 2017

MARKET OUTLOOK FOR WEDNESDAY, AUG 16, 2017

In our Daily Market note on Monday, we had mentioned about the NIFTY taking some respite from the sharp corrective movement that it has witnessed through the entire previous week. In line with those projections, the benchmark NIFTY50 saw a gap up opening and witnessed a sharp technical pullback and ended the day with gains of 83.35 points or 0.86%. However, the coming sessions would be critically important for the Markets as the current pullback has been on back of heavy short covering. It is important that such short covering continues and subsequently gets replaced with fresh buying.

Wednesday will see the levels of 9825 and 9860 acting as immediate resistance. The supports come in at 9750 and 9685 levels.

The Relative Strength Index – RSI on the Daily Chart is 43.5271 and it is neutral showing no divergences against the price. The Daily MACD is bearish but has flattened its trajectory. On Candles, a small candle resembling a bullish belt hold has occurred. Thus usually implies continuation of the pullback.

The Pattern Analysis shows that the Markets has remained in the rising channel that it has been trading in and has held the 50-DMA as it support at the Close levels.

The VIX remains at 7-month high levels. It is also important to note that the pullback on Monday has come with reduction in the Open Interest which hints at heavy short covering. As mentioned above, it would be critical to see that this continues and we see fresh longs being built over coming days. As of now, the NIFTY has validated support at 50-DMA and the zones of 9700-9770 will be extremely critical short term support. We recommend avoiding shorts and making modest purchases with declines and continue to adopt cautious approach 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

www.EquityResearch.asia

http://milan-vaishnav.blogspot.com

+91-98250-16331 

milan.vaishnav@equityresearch.asia

milanvaishnav@yahoo.com

MARKET OUTLOOK FOR MONDAY, AUG 14, 2017

MARKET OUTLOOK FOR MONDAY, AUG 14, 2017

The Friday’s session saw the benchmark declining for the fifth day in a row while it ended the day losing 109.45 points or 1.11%. NIFTY has ended the day below its 50-DMA but stays within its filter as of today. We expect a quiet opening on Monday and there are chances that the Markets may find some stability and attempt a respite from the current downtrend. As the Markets have stayed within the filter of 50-DMA, a technical bounce back can be expected. But in any case, the levels of 9700-9770 will continue to remain extremely critical zones to watch out for. The behavior of the Markets vis-à-vis these level will decide the depth of the correction over coming days.

The zones of 9770 and 9825 will act as important support levels for the Markets. The supports come in at 9685 and 9610 zones.

The Relative Strength Index – RSI on the Daily Chart is 36.3013 and it has reached its lowest value in last 14-adys which is bearish. It does not show any divergence against the price. The Daily MACD stays bearish while trading below its signal line. Conflicting signals have occurred on Candles. A falling window has occurred which usually results into continuation of weak trend. On the other hand, a Doji too has emerged. This often signals reversal from the current downtrend but this requires confirmation on the next trading day.

The pattern analysis show that the NIFTY has ended below its pattern support at 50-DMA but stays within its filter. Also, it rests on the lower support line of the Channel that the Markets are currently trading in.

All and all, the Markets currently rest at pattern support and therefore the zones of 9700-9770 remains extremely critical levels to watch out for. If the Markets breach these levels, it may test 100-DMA which rests at 9538 levels. However, evident creation of short positions and the current pattern support increase the chance that we might see some respite from the corrective move and we see some technical pullback.

Milan Vaishnav, CMT 

Technical Analyst 

(Research Analyst, SEBI Reg. No. INH000003341)

Member: 

Market Technicians Association, (MTA), USA

Canadian Society of Technical Analysts, (CSTA), CANADA

www.EquityResearch.asia

http://milan-vaishnav.blogspot.com

+91-98250-16331 

milan.vaishnav@equityresearch.asia

milanvaishnav@yahoo.com