MARKET OUTLOOK FOR FRIDAY,MAY 25, 2018

MARKET OUTLOOK FOR FRIDAY,MAY 25, 2018

Though the Markets were expected to attempt to find some stability, the session remained much contrary to what was expected on Thursday. After a tepid start and losing ground in the initial trade, the NIFTY rebounded sharply and nearly tested the 100-DMA. The benchmark Index ended the day gaining 83.50 points or 0.80%.

If we draw a conclusion with a technical angle, the NIFTY has defended the 50-DMA levels at Close which stand at 10471.60. Stepping into Friday’s trade, we expect this attempt of an pullback to continue. However, in any case, the 100-DMA levels of 10538 still remain a concern and we cannot take NIFTY as completely out of the woods as yet.

Friday is likely to see the levels of 10538 and 10595 acting as immediate resistance area. Supports come lower at 10470 and 10380 zones.

The Relative Strength Index – RSI on the Daily Chart is 44.16 and it remains neutral showing no divergence against the price. The Daily MACD stays bearish while trading below its signal line. It has started to narrow its trajectory. On the Candles, a strong bullish candle emerged. It has emerged near the support area of 50-DMA and therefore it holds some significance.

The pattern analysis throws up an interesting picture. The 50-DMA rule below the 100-DMA and this indicates likely continuation of short term weakness. The NIFTY has pulled back from near the 50-DMA and this has validated 50-DMA as support for the immediate short term. However, it has still resisted to the 100-DMA mark which stand at 10538.

Overall, again the level of 10538, which is the 100-DMA has come into play again. Though a quiet start is expected and some follow up move may still be seen, the NIFTY can still find resistance at Close levels at 100-DMA. Any fresh sustainable up move shall occur only after the NIFTY moves past and closes above the mentioned level. Until this happen, theoretically speaking, the Markets still remain susceptible to selling pressure at higher levels.

STOCKS TO WATCH:

Long positions were seen being built in stocks like BHARTI AIRTEL, STATE BANK, JSW STEEL, PFC, NCC, IDEA, SUN PHARMA, DLF, POWER GRID, KPIT, INFOSYS, ICICI BANK and ITC.

(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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