MARKET OUTLOOK FOR THURSDAY,APR 05, 2018

MARKET OUTLOOK FOR THURSDAY,APR 05, 2018

What was a session of perfect consolidation in the first half, turned out to be an equally dismal one when the Markets reacted to the imposition of tariffs by China in a counter move. Though the reaction was very much knee-jerk in the nature, the NIFTY ended the day with a deep cut losing 116.60 points or 1.14%.

The nominal damage that the Wednesday’s session did was that the NIFTY slipped and ended below the 200-DMA which stands at 10188. Going in to trade on Thursday, given the large number of shorts that are created, we expect a positive start. However, there are chances that the NIFTY once gain tests the 200-DMA and consolidates around those levels.

Thursday will see the level of 10190 and 10245 as the immediate resistance area for the Markets. Supports come in at 10080 and 10040 zones.

The Relative Strength Index – RSI on the Daily Chart is 42.7459 and it remains neutral showing no divergence against the price. The Daily MACD still remains bullish as it trades above its signal line. A big black body that emerged on Candle reinforces the credibility of the resistance area at the place where it occurred.

The pattern analysis shows that the Markets have suffered a minor breach as it ended below its 200-DMA. Even if it shows a likely positive start given the large amount of short positions, the likely resistance that it can face at 200-DMA cannot be taken lightly as of today.

Overall, it is evident that large number of shorts was added to the system in the previous session. Further taking into account the reaction that is likely to remain more of a knee-jerk in nature, we might see the Markets attempting to recover some of its losses that it suffered on Wednesday. However, with the fact that the NIFTY has ended below 200-DMA, theoretically speaking, this level may act as resistance while it attempts to pullback. We advise against creating aggressive positions and also against creating fresh shorts. While preserving cash, cautious outlook is advised for the day.

STOCKS TO WATCH:

Fresh short positions were seen being added on counters VEDANTA, CGPOWER, HIND ZINC, HINDALCO, NTPC, HCC, ITC, ONGC, SAIL, TATA STEEL, HDFC BANK, COAL INDIA, LARSEN & TOUBRO and WIPRO.

(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 
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