Gemstone Equity Research & Advisory Services: 3/4/18

Friday, March 9, 2018

MARKET OUTLOOK FOR FRIDAY, MAR 09, 2018

MARKET OUTLOOK FOR FRIDAY, MAR 09, 2018

Some short covering was witnessed in Thursday’s session as the benchmark Index NIFTY50 stopped its 6-day losing streak to end in the green. The NIFTY ended the day gaining 88.45 points or 0.87% though not before paring some gains from the high point of the day. The Markets failed to capitalize on the strong opening it enjoyed in the earlier trade. However, the short covering took the Markets higher later on.

Going into trade on Friday, we still need to approach the Markets with caution. It is likely that the Markets enjoy good opening again. However, it is just not completely out of the woods. Markets will have to crawl above the 10275-10300 zones and it would also need to see that the current short covering that it witnessed gets replaced with fresh buying.

In Friday’s trade, the levels of 10275 and 10320 will act as immediate resistance levels for the Markets. Supports come in lower at 10210 and 10150 levels.

The Relative Strength Index – RSI on the Daily Chart is 37.0612 and it remains neutral showing no divergence against the price. The Daily MACD stays bearish while trading above its signal line. On the Candles, a white body with long lower shadow emerged. It remains significant as it occurred near important support area of 200-DMA. This has capacity to potentially mark a bottom. This also needs confirmation on the next trading day.

While having a look at pattern analysis, the NIFTY has given a downward breakout from the 10276-10300 support area. In the attempts to find bottoms, it has tested the 200-DMA support levels twice intraday.

Overall, there is no doubt that the Markets have attempted to take support at its 200-DMA and has defended it twice. However, this effort will get confirmed only after the NIFTY moves past 10275-10300 resistance area. Until this happens, it will theoretically continue to remain vulnerable to volatile selling bouts. We recommend traders to refrain from creating major short positions. Longs, however, should be taken very selectively as well. Cautious outlook is advised until the Markets establish a clear directional bias after confirming a bottom for the immediate short term.

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
www.EquityResearch.asia
http://milan-vaishnav.blogspot.com

+91- 70164-32277 / +91-98250-16331
milan.vaishnav@equityresearch.asia
milanvaishnav@yahoo.com

Thursday, March 8, 2018

MARKET OUTLOOK FOR THURSDAY, MAR 08, 2018

MARKET OUTLOOK FOR THURSDAY, MAR 08, 2018

The Indian Equity Markets remained much weaker today and continued with its slide as the benchmark NIFTY50 ended the day with net loss of 95.05 points or 0.93%. What was technically important today was that the NIFTY tested its 200-DMA which is expected to act as major support. The 200-DMA level stands at 10131.

Markets currently remain precariously poised. The weakness was dominant on Wednesday’s trade as the NIFTY showed no inclination to pullback despite being whisker away from the major support zone of 200-DMA. While we approach the trade on Thursday, we have to approach it with a two diverse facts in mind. First, the weakness in the general markets is not showing any signs of backing off. Secondly, the NIFTY trades oversold on major indicators and we have seen high amount of shorts that have been built in the system which can make short covering imminent.

Thursday will see the levels of 10225 and 10270 acting as immediate resistance zone for the Markets. Supports come in at 10100 and 10010 levels.

The Relative Strength Index – RSI on the Daily Chart is 30.9247 and it has got nearly oversold. It has marked a fresh 14-period low which is bearish. The Daily MACD stays bearish while trading below its signal line. No significant patterns were observed on Candles.

Pattern analysis clearly indicates that the NIFTY has broken down from the brief trading range that it formed during it recent declines. It has breached the support zone of 10276-10300 and currently stands in extremely close vicinity of 200-DMA.

If read in isolation, the structural weakness is now seen evidently on the Charts. However, what forces us to wait for a very imminent technical pullback is that the lead indicators are oversold. Coupled with this, we have created very significant amount of short positions over last couple of days. Further, if we look at all sector and broader Market indices, they all are either deeply oversold, or are seen taking support at its 200-DMA.

In view of the above facts, we would strongly recommend trades to move out of any major short positions. There are chances of a technical pullback and the behavior of the Markets vis-à-vis the 200-DMA at Close levels will be immensely important. Resilient relative outperformance can be expected from select Auto, Metals and FMCG components.

Milan Vaishnav, CMT, MSTA
Technical Analyst
(Research Analyst, SEBI Reg. No. INH000003341)

Wednesday, March 7, 2018

MARKET OUTLOOK FOR WEDNESDAY, MAR 07, 2018

MARKET OUTLOOK FOR WEDNESDAY, MAR 07, 2018

The session on Tuesday remained thoroughly disappointing as the NIFTY plunged to a fresh 2018 lows and slightly violated its important support zone of 10276-mark. The NIFTY traded with modest gains all throughout the session but the last hour and half of trade saw the Markets rapidly paring gains and the benchmark ended the day with net loss of 109.60 points or 1.06%.

Going into trade on Wednesday, Markets face a acid-test. The support zone of 10276 stands slightly violated. The NIFTY reacted after it tested the 100-DMA level in the morning trade. Currently the Markets remain very precariously poised as on one hand it is likely to slip further which may take it to test 200-DMA and on the other hand, the Markets also sit on very large number of short which may lead to short trap going further. In any event, the behavior of the Markets vis-à-vis the levels of 10300 will be important to watch for.

The levels of 10310 and 10365 will act as immediate resistance area for the Markets. On the other hand, supports come in at 10210 and then further lower at 10127 mark.

The Relative Strength Index – RSI on the Daily Chart is 34.2577 and it has marked a fresh 14-period low which is bearish. It does not show any divergence against the price. The Daily MACD continues to stay bearish while trading below its signal line. A big black body emerged on the Candles. This has lent credibility to the resistance area of the 100-DMA mark.

While having a look at pattern analysis, NIFTY has slightly violated the support area of the 10275-mark and has ended a notch below that. This translates into violation of the small rectangle pattern that the NIFTY has developed after its recent decline.

Overall, the levels of 10275-10300 will remain extremely crucial to watch for. The longer the NIFTY stays below 10300 mark, higher will be the chances of it getting weaker and testing the 200-DMA levels. On the other hand, NIFTY will avert any weakness if it manages to crawl back above the 10300-mark. The global markets trade extremely stable. Though the Indian Markets remain sentimentally weak owing to domestic reasons, it is not likely to remain decoupled with global stability for long time. Given the massive amounts of shorts that still continue to get piled up each day, we advice participants to not to create any fresh shorts at current levels. Staying away and remaining light on exposures is what is advised while adopting a highly cautious view on the Markets.

STOCKS TO WATCH:

Large amount of short positions were seen being added on counters like STEEL AUTHORITY, ICICI BANK, JP ASSOCIAT, STATE BANK, DISH TV, AXIS BANK, RCOM, ITC, HINDALCO, LARSEN & TOUBRO and DLF.

(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)

Tuesday, March 6, 2018

MARKET OUTLOOK FOR TUESDAY, MAR 06, 2018

MARKET OUTLOOK FOR TUESDAY, MAR 06, 2018

The Indian Equity Markets began its week much on expected lines. The benchmark index NIFTY saw a weaker opening as anticipated and ended the day losing 99.50 points or 0.95%. The weakness was in line with global markets that faced weaker sessions following Trump administration stets to levy 25% and 10% duties on steel and aluminum respectively. If we look at Monday’s trade from purely technical point of view, the NIFTY still remains within critical support area of 10276-10310 zones.

While we approach Tuesday’s trade, we expect the Markets to see some stability. Though a quiet start is expected, we do not see the breach of the 10276-10310 support area. The behavior of Markets vis-à-vis this support area will be important as the way it is expected to act as sacrosanct support, any breach of this area will bring in weakness for the Markets. On the upper side, the levels of 10410 and 10465 will play out as resistance area.

The Relative Strength Index – RSI on the Daily Chart is 38.7266 and it has shown a Bullish Divergence against the price. The NIFTY has set a fresh 14-period low while RSI did not follow the suit. The Daily MACD still remains bearish as it trades below its signal line. A falling window occurred on Candles which usually implies continuation of current trend. However, since this has occurred near the support zone, it may have limited negative impact.

If we look at pattern analysis, the NIFTY still remain in the broad congestion area that it has created for itself following its most recent decline. It will remain in this area until it trades above 10275-mark which is expected to act as sacrosanct support for the Markets.

Overall, the behavior of Markets vis-à-vis the levels of 10310-10276 will be extremely crucial to watch. We expect global markets to stabilize and in turn also expect some stability in the domestic markets as well. This increases the chances of the Markets defending the support zone and attempt to find some stability in the immediate short term. Incremental shorts were seen being added in the system which further increases the chance of the Markets finding support in the 10275-10310 support area. While avoiding any major positional bias, cautious outlook is advised for the day.

STOCKS TO WATCH:

Fresh longs were seen being added in STATE BANK, TECH MAHINDRA, NTPC, MANNAPURAM FINANCE, MINDTREE CONSULTING, M&M, TATA GLOBAL, TCS, SUN PHARMA, VOLTAS and HEXAWARE.

(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)

Monday, March 5, 2018

MARKET OUTLOOK FOR MONDAY, MAR 05, 2018

MARKET OUTLOOK FOR MONDAY, MAR 05, 2018

The Markets shall open on Monday after a slumber following long weekend. On Thursday’s trade, saw the last hour cautionary selloff following which the benchmark NIFTY50 ended the day with net loss of 34.50 points or 0.33%. Friday has remained a globally weak day following the Trump administration issuing a diktat to impose 25% duty on Steel and 10% on aluminum which was not received well by the global markets.

Going into trade on Monday, it is very much likely that we may see a negative opening. However, having said that, we also believe that the opening would not be as brutal as it would have if we had opened on Friday. On the Friday’s trade, the Dow recovered nearly 500-odd points from the low point of the day before ending with minor losses. The SGX NIFTY which had lost 180-odd points on Thursday recovered nearly 70-points from the low point of the day.

Monday’s trade is likely to see the zones of 10275-10310 providing key supports even if the weakness is more-than-expected. In routine course, the zones of 10380 and 10350 are likely to act as likely supports. Resistance remains in the 10490 and 10545 zones.

The Relative Strength Index – RSI on the Daily Chart is 43.5116 and it stands neutral showing no divergences to the price. The Daily MACD still remains bearish as it trades below its signal line. No significant formations were observed on Candles.

While having a look at pattern analysis, as of today, the NIFTY is still in the congestion area that it has created for itself following its most recent decline. It is in form of a small symmetry and the NIFTY has currently taken support at its 100-DMA at Close levels.

All and all, though weaker opening on Monday cannot be ruled out; the quantum of weakness that we will see will largely define the trend for coming days. We expect not-so-brutal weakness and reaction in the Markets on Monday. Also, we expect that the Markets will not breach the congestion area that it is currently trading in. Looking at the amount of shorts that exists in the system, we expected them to provide cushion to the Markets at lower levels. We recommend participants taking a highly cautious view on the Markets. However, large shorts should be avoided and overall exposures should be kept moderate.

STOCKS TO WATCH:

Resilient technical set up is observed on stocks like JAYPEE INFRATECH, SINTEX, ORIENTAL BANK, INFOSYS, INOX WIND, MINDTREE, IVRCL, VEDANTA, ASHOK LEYLAND and IIFL Holdings.

(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)

Gemstone Equity Research & Advisory Services

Friday, March 9, 2018

MARKET OUTLOOK FOR FRIDAY, MAR 09, 2018

Thursday, March 8, 2018

MARKET OUTLOOK FOR THURSDAY, MAR 08, 2018

Wednesday, March 7, 2018

MARKET OUTLOOK FOR WEDNESDAY, MAR 07, 2018

Tuesday, March 6, 2018

MARKET OUTLOOK FOR TUESDAY, MAR 06, 2018

Monday, March 5, 2018

MARKET OUTLOOK FOR MONDAY, MAR 05, 2018

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