MARKET OUTLOOK FOR FRIDAY, FEB 02, 2018

MARKET OUTLOOK FOR FRIDAY, FEB 02, 2018

Equity Markets witnessed immense volatility today during the Budget Session and the benchmark Index NIFTY50 swung 175-points on either side during the day. Despite such volatility, the Index ended the day virtually flat losing 10.80 points or 0.10%. Markets saw a sharp 170-odd point’s recovery from the lows of the day in the second half of the session.

The Budget, in all likelihood, will be perceived in a mature way by the Markets. Though there will be still some follow-up reactions to the Budget for couple of days, the level of 10,880 which remains in the vicinity of the short term 20-DMA shall act as a strong base for the Markets.

The levels of 11,075 and 11,110 will play out as immediate resistance area for the Markets. Supports come in at in form of a strong base around 10880-mark.

The Relative Strength Index – RSI on the Daily Chart is 69.2956 and it has just crossed below 30 from a topping formation. The Daily MACD remains in buy mode while trading above its signal line but is seen moving towards negative crossover. On the Candles, a long-lower-shadow occurred. This usually halts the downtrend if it happens during a correction or a consolidation and hints towards a potential pullback. However, this needs confirmation on the next trading day.

The pattern analysis shows that the NIFTY has done nothing but consolidated on Close basis despite 175-point swing on either side. The volatility has ensured that a likely base may be formed near the 10880-mark which also happen to lie within a close proximity of the short term 20-DMA and hence is expected to act as strong support.

All in all, if we look at Markets from point of view of Budget proposals, the Budget may not be taken too badly by the Markets despite some short term volatility that may still remain. The major takeaways from the Budget are rural focus, infrastructure boost, benefits to marginal farmers, extending corporate tax rate cut to MSMEs, and encouraging rural spending.

It was believed that the Budget will grossly remain a populist one. Not only this turned out to be a more fiscally prudent, the FM also introduced return of LTCG at 10% which may induce short term volatility.  Despite looming 2019 elections, the FM chose to remain fiscally prudent will taken in good spirits by the Markets in the long run once the immediate reactions are over. We recommend preserving liquidity and saying away from creating any speculative bets as all volatility will present fresh selective buying opportunities.

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 
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