Gemstone Equity Research &amp; Advisory Services

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Friday, October 13, 2017

MARKET OUTLOOK FOR FRIDAY, OCT 13, 2017

MARKET OUTLOOK FOR FRIDAY, OCT 13, 2017

Thursday session remained quite buoyant on for the Indian Equities as the benchmark NIFTY50 ended the day with a robust uptick ending the day with net gains of 111.60 points or 1.12%. Session remained sideways for the most part of the day and the bulk of the gains came in the last hour and half of the trade. Going into trade on Friday, we expect this up tick to continue and in the same breath, expect the Markets to face serious resistance going ahead from here. We should not be surprised if the NIFTY continues with its up move on Friday and also if it faces consolidation and some resistance at higher levels.

The levels of 10135 and 10180 will play out as major resistance area for the markets. Support can be expected around 10040 and 9990 area.

The Relative Strength Index – RSI on the Daily Chart is 60.6702 and it has marked a fresh 14-period high which is bullish. Daily MACD trades comfortably above its signal line and are bullish. A strong white body occurred on Candles. Its emergence is important as it has occurred after a brief consolidation of the Markets near its support area of 50-DMA.

Pattern analysis shows that the NIFTY is now not only well within the upward rising channel but also now trades comfortably in the broad rectangular trading range that the Markets have established. This is marked using red dashed-lines on the Daily Charts. It should not come as a surprise if the NIFTY spends some time in this broad trading range.

Taking a view specifically about Friday’s session, the NIFTY is likely to see a modestly positive start. There will be sentimentally positive reaction to the better-than-expected numbers from TCS. Other front line companies are also due to report their numbers in next couple of days. All these reactions are likely to keep the Markets volatile and in a trading range trading with upward bias. Though we continue to reiterate completely avoiding shorts, we also recommend exercising higher degree of caution as the NIFTY attempts to once again attempt to test its previous highs. Overall, cautious optimism is what we advise for the day.

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

+91- 70164-32277 / +91-98250-16331

Thursday, October 12, 2017

MARKET OUTLOOK FOR THURSDAY, OCT 12, 2017

MARKET OUTLOOK FOR THURSDAY, OCT 12, 2017

In our Wednesday’s note, we had made a categorical mention about possibilities of profit taking bout from higher levels. On Wednesday, the Markets traded precisely on those lines as the benchmark NIFTY gave up nearly 90-odd points from the intraday high and ended the day with net loss of 32.15 points or 0.32%. Going into trade on Thursday, we continue to expect the Markets in general to remain volatile and continue to remain susceptible profit taking bouts at higher levels. However, huge amount of shorts were seen being added to the system and this will cushion the Markets on the downside in coming days.

The levels of 10030 and 10065 will play out as immediate resistance area for the Markets. Supports come in at 9945 and 9910 levels.

The Relative Strength Index – RSI on the Daily Chart is 53.4260 and it remains neutral showing no divergence to the price. The Daily MACD stays bullish while trading above its signal line. An Engulfing bearish pattern has emerged on NIFTY. Since this has come during an upward pullback, it may halt the up move temporarily. However, it requires confirmation on the following day.

The pattern analysis show that the NIFTY has taken support on the rising trend line and this is likely to remain the crucial support area for the NIFTY followed by the important 50-DMA which stands at 9943.

Overall, we see the coming days remain volatile to a larger extent and all up moves are likely to remain susceptible to profit taking bouts much similar to what we witnessed on Wednesday. Having said this, given the shorts in the system, the downsides too remain limited. Overall, as we see all these factors, we can fairly conclude that we are facing volatile but range bound days ahead. We continue to recommend adopting a highly stock specific cautious view on the Markets over coming days.

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

+91- 70164-32277 / +91-98250-16331

Wednesday, October 11, 2017

MARKET OUTLOOK FOR WEDNESDAY, OCT 11, 2017

MARKET OUTLOOK FOR WEDNESDAY, OCT 11, 2017

The Indian Equity markets continued to extend its gains and ended above the 10k mark but the session continued to remain capped and in a narrow range. The benchmark NIFTY50 ended the Tuesday’s trade with modest gains of 28.20 points or 0.28%. We may continue to expect a quiet start to Wednesday’s trade but the increasingly narrow intraday bands and lowest value of VIX in recent times warrants a caution at higher levels. Though there are no imminent signs of any danger, we are now required to treat each up move with more and more focus on protecting profits and creating defensive bets.

The levels of 10040 and 10085 are likely to act as immediate resistance levels for Wednesday. Supports come in at 9945 and then at 9910 zones.

The Relative Strength Index – RSI on the Daily Chart is 56.1949 and it continues to stay neutral. The Daily MACD has reported a positive crossover and it now bullish trading above its signal line. A Spinning Top occurred on Candles. It is typically a session with a small intraday band and often signals continued sense of indecision among Market participants.

The pattern analysis show that the NIFTY has once again entered back into the upward rising channel that it has been trading in. Now, with the levels of 50-DMA as its immediate support, we can expect the Markets to consolidate and trade in a range.

Overall, we still maintain that the undercurrent remains strong and the Markets have shown no signs of any reversal. However, some couple of factors warrant our short term attention. VIX is at its lowest in recent times. Further a spinning top has emerged after a Doji indicating continued existence of narrow intraday bands which often results out of continued indecisiveness of Market Participants. All these point towards likely bouts of profit taking at higher levels. At least, some increased volatility in coming days cannot be ruled out. We recommend protecting profits at each higher level and maintain a cautious outlook for the day.

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

+91- 70164-32277 / +91-98250-16331

Tuesday, October 10, 2017

MARKET OUTLOOK FOR TUESDAY, OCT 10, 2017

MARKET OUTLOOK FOR TUESDAY, OCT 10, 2017

Indian Markets on Monday witnessed a very range bound session as the benchmark NIFTY50 moved in a much capped range all throughout the day and closed with minor gains of 9.05 points or 0.09%. The session saw the Index heading nowhere and trading in a directionless manner and in much tentative mode. Tuesday will once again see a modest opening but we expect the Markets to trade in a range bound manner with positive bias. It would be critical to see that the NIFTY continues to maintain itself above the 50-DMA mark.

Tuesday will see the levels of 10030 and 10055 playing out as immediate resistance levels. The levels of 9945 and 9910 will act as support area for the Markets.

The Relative Strength Index – RSI on the Daily Chart is 54.2643 and it continues to stay neutral trading above its signal line. The Daily MACD is still bearish while it trades below its signal line. However, it is moving sharply towards reporting a positive crossover. In event of no downsides, we may see this indicator reporting a positive crossover. On the Candles, a Doji star has occurred since it has gapped above the previous candle. This may potentially keep the Markets momentarily subdued. However, this requires confirmation on the following day.

Pattern analysis shows that the NIFTY has so far managed to keep its head above 50-DMA. Also, it trades slightly in the upward rising trend line and therefore is inside the upward rising channel. However, given the rising nature of the trend line, this critical level of support / resistance too is rising higher each day. Therefore, it is imperative and extremely important for the Markets to move up from current levels to go back comfortably into the upward rising channel.

All in all, the tentative nature of the Monday’s session may remain a slight worry. As of now, as evident from the F&O data, the under current remains buoyant and we may expect the Markets to continue with its up move after a brief deliberation. However, in the process, sustenance of the NIFTY above 50-DMA will continue to remain of critical importance. Cautiously positive stock specific approach is advised for the day.

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

+91- 70164-32277 / +91-98250-16331

Monday, October 9, 2017

MARKET OUTLOOK FOR MONDAY, OCT 09, 2017

MARKET OUTLOOK FOR MONDAY, OCT 09, 2017

Indian Equity Markets continued to display its buoyant undertone as the Friday’s session saw a better-than-expected show while the benchmark NIFTY50 ended on a strong note gaining 91 points or 0.92%. In view of the Friday’s session, the Index has crawled back once again above the 50-DMA mark and has attempted to throw itself back into the upward rising channel that it has been trading in over past couple of month. While a quiet start to the Markets is expected on Monday, the key would be to see if it continues to successfully survive above 50-DMA levels. The VIX has once again dropped to the lowest values in recent times.

Monday is expected to see the levels of 10030 and 10075 playing out as resistance area for the Markets. Supports come in at 9945 and 9910 zones.

The Relative Strength Index – RSI on the Daily Chart is 53.6557 and it remains neutral showing no divergence against the price. The Daily MACD still remains bearish while it trades below its signal line.

The pattern analysis depict a positive development that the Index has once again crawled back above its 50-DMA has averted a immediate loss of momentum. Further, it has also attempted to trade inside the upward rising channel that it has breached on the downside couple of days back.

Overall, if we take a broader view of the Markets, though the immediate creeping in of weakness seems to have been averted, it would be important for the Markets to sustain above the 50-DMA. This will keep the short term momentum intact. Markets are little overbought on Stochastic and the returning of the VIX to its lowest levels in recent times once again indicate that we might see volatility creeping into the Markets once again. We reiterate avoiding shorts and continue making select purchases and use all up moves to protect profits.

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

+91- 70164-32277 / +91-98250-16331

Sunday, October 8, 2017

WEEKLY MARKET OUTLOOK FOR OCT 09 THRU OCT 13, 2017

WEEKLY MARKET OUTLOOK FOR OCT 09 THRU OCT 13, 2017

The week that went by certainly saw volatility remaining ingrained in the Markets much on expected lines but overall it remained much better than expected. In the short week, the benchmark ended the Week with net gains of 191.10 points or 1.95% on weekly basis. The Weekly Charts have validated the broad trading pattern that has appeared on the Daily Charts. Just like Daily Charts, a rectangular pattern is emerging on the Weekly Charts as well. This gives credibility to both the patters as the patterns are fractal in nature. In the coming week, we will see the Markets remaining volatile and range bound but trading with upward bias. Though no major downsides are likely, the top of 10179 too is not likely to be taken out too soon too fast.

Next Week will see the levels of 10050 and 10175 playing out as resistance area. Supports will remain at 9910 and 9830 zones.

The Relative Strength Index – RSI on the Weekly Chart is 61.2419 and it remains neutral showing no divergence against the price. The Weekly MACD is bearish as it trades below its signal line. No major formations were observed on Candles.

The pattern analysis indicates that the NIFTY continues to remain comfortably in the 18-month old upward rising channel. However, it also appears that the NIFTY is likely to form a rectangular trading range just like it did on the Daily Charts.

All and all, given the lead indicators and overall sectoral study, we are unlikely to see any major downsides in the Markets in the coming week. However, in the same breath, runaway rise beyond the previous highs of the Markets is unlikely as well. We expected to see range bound movement with some volatility ingrained in the Markets in the coming week. With signs of any reversal as yet, shorts should be avoided and dips should be utilized to making fresh select purchases.

A study of Relative Rotation Graphs – RRG show that in the coming week, METAL stocks will continue to relatively outperform. Along with this, we will also see good performance coming in from IT and PHARMA stocks. MEDIA too has shown improvement and we will see select gains in this sector as well. We are likely to see select and highly stock specific outperformance in broader Indices like CNX100 and CNX200. No major show is expected from FMCG, REALTY and PSUBANKS. NIFTY Junior (Nifty Next 50) is likely to lose momentum this week.

(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 Market Technicians Association, (MTA), USA

Canadian Society of Technical Analysts, (CSTA), CANADA

Society of Technical Analysts, STA (UK)

+91-70164-32277 / +91-98250-16331