MARKET OUTLOOK FOR TUESDAY,JUNE 05, 2018

MARKET OUTLOOK FOR TUESDAY,JUNE 05, 2018

Indian Equity Markets saw a volatile session on Monday as the NIFTY continued to oscillate in a range but continued with its corrective decline as well. The Index made a negative beginning to the week and NIFTY ended the day losing 67.70 points or 0.63%. The NIFTY slipped below its short term 20-DMA and the overall structure of the Charts suggest that such tentative mood of the Markets is likely to persist for some time. Significant amount of short positions were seen being added in the system.

Given the amount of shorts that exists in the system, we might see a modestly positive opening to the trade on Tuesday. However, the NIFTY continues to remain vulnerable to selling pressure from higher levels until some fresh area formation helps prepare a base for NIFTY for a fresh up move.

Tuesday will see the levels of 10650 and 10735 acting as immediate resistance levels for the Markets. Supports come in at 10580 and 10540 zones.

The Relative Strength Index – RSI on the Daily Chart is 50.4630. RSI stays neutral and shows no divergence against the price. The Daily MACD stays bearish while trading below its signal line. A big black candle emerged. This remains significant as it occurred near the 20-DMA and this gives credibility to the resistance area in the present situation.

If we look at pattern analysis, NIFTY has slipped below the 20-DMA while lending credibility to the short term resistance area for the Markets. Markets remain in very close vicinity of the 100-DMA support area and is expected to continue to spend some more time in the present broad range.

Overall, though a modestly positive opening is not ruled out on Tuesday, the NIFTY still continues to remain vulnerable to some selling pressure once again from higher levels. However, given the amount of shorts that exist in the system, it is likely to keep the overall downsides limited. All this translates into a likely range bound session with some amount of volatility remaining ingrained. Cautious view is advised for the day.

STOCKS TO WATCH:

Short positions were seen being added in HDFC BANK, POWERGRID, BANK OF BARODA, BHEL, ADANI POWER, INFIBEAM, ITC, DHFL, NATIONAL ALUMIUM, VEDANTA, JAIN IRRIGATION, DISH TV and AMBUJA CEMENTS.

(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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