Gemstone Equity Research & Advisory Services: 4/29/18

Saturday, May 5, 2018

WEEKLY MARKET OUTLOOK FOR MAY 07 THRU MAY 11, 2018

WEEKLY MARKET OUTLOOK FOR MAY 07 THRU MAY 11, 2018

Much on the expected lines and after five weeks of a significant pullback, the Markets chose to take a breather in the week that went by. The benchmark NIFTY50 stalled its up move, moved in a range and ended the week with a net loss of 74.05 points or 0.69%. The level of 10790 was mentioned in our previous weekly note as a potential resistance levels and the previous week’s high stood at 10784 with the NIFTY resisting precisely in the mentioned zone.

As we approach the coming week, we expect the Markets to continue to consolidation. The relatively low levels VIX in recent times has made some room for volatility returning and persisting in the Markets in the immediate near term.

Just like it happened in the previous week, we expect the level of 10790 acting as immediate resistance levels for the Markets along with 10890. Supports are expected to come in at 10550 and 10430 zones.

The Relative Strength Index – RSI on the Weekly Charts is 57.6791. RSI remains neutral to the price showing no divergence. The Weekly MACD still remains bearish as it trades below its signal line. However it is seen steeply moving towards positive crossover. If the coming week does not see any major declines, we may see this indicator turning bullish as well. No significant formations were observed on Candles.

Pattern analysis of the Weekly Charts shows the 27-month long upward rising channel intact. However, a potential lower-top in the form of the 10784-mark is seen being formed. In other words, this area is a important resistance in the immediate near term for the Markets.

Overall, the structure of the Charts and the indicators point towards two distinct possibilities. First, it is very much likely that the NIFTY will continue to witness some more consolidation and we will also see some volatility creeping in as well along with this. Secondly, it is equally likely that despite near-certainty of the consolidation or mild corrective moves spilling over to the coming week, we will see resilience from the Markets and downsides, if any, will remain limited. However, fresh up move shall occur only after the levels of 10785 are breached on the upside. Effective rotation of sectors and selective approach towards stocks will remain indispensible in the coming week.

A study of Relative Rotation Graphs – show that IT Pack is evidently seen losing momentum and might enter a longer consolidation phase. We will see relative outperformance from the FMCG pack along with services sector components. We will also see betterment of relative performance from the AUTO, Financial Services, NIFTY MID50, NIFTY NEXT50 and broader Indices like CNX100 and CNX200 as they are all seen entering the Improving Quadrant while bettering their relative momentum. We will also see sectors like PHARMA, PSUBANKS, BANKNIFTY, SMALL CAPS, INFRA and MEDIA consolidating and contributing through stock specific out performances. All this is cumulatively likely to keep Markets resilient to downsides. Apart from this, no noticeable show is expected from Metals, REALTY, ENERGY, Public Sector Enterprises apart from attempts to consolidate.

Important Note: RRG™ charts show you the relative strength and momentum for a group of stocks. In the above Chart, they show relative performance as against NIFTY Index and should not be used directly as buy or sell signals.

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

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

Friday, May 4, 2018

MARKET OUTLOOK FOR FRIDAY,MAY 04, 2018

MARKET OUTLOOK FOR FRIDAY,MAY 04, 2018

In the Thursday’s session, we continued to witness the corrective tendency of the Markets. Though the NIFTY50 remained in a capped range on expected lines, it continued to correct for the second day in a row. The Index ended the day losing 38.40 points or 0.36%. As we approach Friday’s trade, we expect this consolidating behavior of the Markets to continue. The elevated levels of NIFTY PCR (Put to Call Ratio) along with slightly stretched structure of the Markets might keep up move under check in the immediate short term.

As we approach the Friday’s trade, we expect a tepid start to the trade. While we expect no major downsides, we expect some more consolidation happening which will be in fact healthy for the Markets.

We expect the levels of 10710 and 10765 acting as resistance area while supports are expected to come in at 10630 and 10590 zones.

The Relative Strength Index – RSI on the Daily Chart is 63.7286. It continues to remain neutral showing no divergence against the price. Daily MACD stays bullish and remains above its signal line. No significant formation was observed on Candles apart from a black body.

Thursday’s trade made evident that the Markets are suffering a short term throwback after breaking out from a rectangle formation with important supports existing in close vicinity.

Overall, while expect consolidation to persist for some more time, we also need to factor in the VIX which remain at one of the lowest levels in recent times. This may have some more room for volatility to creep in as well. We reiterate that the way we are experiencing resilience as compared to global markets, we will continue to do so in near term and such range bound consolidation with limited downsides will make the current up move gather strength once again going ahead. We recommend refraining from creating shorts and continue to keep exposures at modest levels. Stock specific out-performance amid range bound consolidation will continue.

STOCKS TO WATCH:

Long positions were seen being added in stocks like SUN PHARMA, MANAPPURAM FINANCE, HDFC, ASHOK LEYLAND, AXIS BANK, VEDANTA, JINDAL STEEL, HINDALCO, TATA STEEL and CGPOWER.

(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)

Thursday, May 3, 2018

MARKET OUTLOOK FOR THURSDAY,MAY 03, 2018

MARKET OUTLOOK FOR THURSDAY,MAY 03, 2018

Our previous note mentioned about volatility (INDIA VIX) remaining at one of the lowest values in recent times. Wednesday’s trade saw volatility making a comeback as the NIFTY saw itself oscillating in a 60-points range on either side before settling with a nominal loss. The NIFTY50 Index ended the day losing 21.30 points or 0.20%.

The Markets consolidated but at the same time remained quite volatile. We expect this volatility to spill over into Thursday’s trade as well. Though the start to the trade may be uneventful on either side, we will see the Markets consolidating with the levels of 10785 acting as immediate resistance area.

In the next session, the levels of 10760 and 10785 shall pose resistance to any up move while supports will come in at 10680 and 10650 zones.

The Relative Strength Index – RSI on the Daily Chart is 67.7129. It remains neutral against the price showing no divergence. The Daily MACD stays bullish trading above its signal line. On the Candles, a black candle emerged. This has occurred near the upper Bollinger band and this typically stalls an ongoing up move.

Pattern analysis reveals that after breaking out from a rectangle formation, the NIFTY is consolidating at higher levels. Though some retracement from current levels should not come as a surprise, presently it has continued to consolidate in a capped range.

Overall, as we approach trade on Thursday, if we see such consolidation continuing, it should work out to be healthy for the Markets. Some shorts have started to get build up once again as we are seeing NIFTY premiums getting reduced by nearly 25-points. We expect the levels of 10785 acting as resistance for the immediate short term and expect the Markets to oscillate with limited downsides. We recommend avoiding shorts and utilizing downsides, if any, to make select purchases. Volatility too is likely to remain ingrained in the Markets. Overall exposures should be kept moderate while maintaining a cautious view on the Markets.

STOCKS TO WATCH:

Short positions were seen being built in HINDZINC, ICICI BANK, IDEA, ASHOK LEYLAND, MARICO, POWERGRID, NCC, TATA POWER, CGPOWER, ENGINERS INDIA, IGL, TVS MOTORS and COAL INDIA.

(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)

Wednesday, May 2, 2018

MARKET OUTLOOK FOR WEDNESDAY,MAY 02, 2018

MARKET OUTLOOK FOR WEDNESDAY,MAY 02, 2018

Broadly speaking, the Indian Equity Markets continued with its up move and stepped into the new week on a buoyant note. Though the Markets remained in a capped range, the benchmark Index NIFTY50 ended the day with gains of 47.05 points or 0.44%. Tuesday was a trading holiday on account of Maharashtra Day. Indian Markets will enter into trade on Wednesday, therefore, after a day or slumber.

Speaking from a global perspective, the day in between has remained largely uneventful. US Markets closed with a modest loss while Europe has traded with modest gains. Going into trade on Wednesday, we expect a quiet start to the session and we can see Markets showing modest strength in the initial trade with some possibilities of consolidation happening again.

We will see the levels of 10750 and 10805 acting as immediate resistance. Supports, on the other hand, will come in at 10675 and 10620 zones.

Relative Strength Index –RSI on the Daily Chart is 69.97. It has marked yet another 14-period high. This indicates continuation of buoyant undercurrent. RSI remains neutral showing no divergence from the price. The Daily MACD continues to trade bullish, above its signal line. On the Candles, a white body occurred. This implies continuation of the present up move. Apart from this, no significant formations were observed on Candles.

While having a close look at pattern analysis, it is evident that the NIFTY deliberated at the upper range of the rectangle formation for sometime before breaking out. Though this remains prone to some throwbacks, we can clearly see a breakout taking place above the 10500 mark.

Overall, there are no major triggers that would influence any sharp movement in the Markets on either side on Wednesday. We will see NIFTY attempting to inch higher. However, the Markets are very near to being overbought and this would mean that it remains prone to some consolidation once again at higher levels. The Bollinger bands are seen getting wider-than-its normal range. Also, the volatility is seen at its lowest levels seen in the recent past. All this may push the Markets under some consolidation and limit them in a range. Stock specific action will dominate the session. We recommend remaining highly stock specific while guarding profits at higher levels.

STOCKS TO WATCH:

Good technical set up is observed in stocks like First Source, IRB Infra, VEDANTA, NATIONAL ALUMINUM, CANARA BANK, INDIAN OIL, JET AIRWAYS, TATA STEEL, NCC, CG POWER and BHEL.

(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, April 30, 2018

MARKET OUTLOOK FOR MONDAY,APR 30, 2018

MARKET OUTLOOK FOR MONDAY,APR 30, 2018

Indian Equity Markets followed up positive closing of the expiry day on Friday. The Markets saw a gap up opening with a renewed vigor, sustained it all throughout the day and the NIFTY ended the day with gains of 74.50 points or 0.70%. We enter into a truncated week with Tuesday being a trading holiday. Barring some more consolidation, we expect this up move to spill over to coming week as well.

Though we see some possibilities once again of consolidation happening at higher levels, we expect a quiet to modestly positive start to the trade on Monday. Markets are likely to see this expansion happening until its next logical targets of 10750-10800 zones. However, this is less likely to happen without any intermittent consolidation spells.

Monday will see the levels of 10730 and 10765 working out as immediate resistance levels for the Markets. Supports exist at 10660 and 10610 zones.

The Relative Strength Index – RSI on the Daily Chart is 67.7660. RSI has marked a fresh 14-period high which is bullish. It remains neutral and shows no divergence against the price. The Daily MACD remains bullish trading above its signal line. On the Candles, a rising window occurred. This is essentially a gap and usually sees a continuation of up move.

Pattern analysis shows that after resisting to a important pattern resistance area for couple of days, the NIFTY has attempted to break out of the rectangle formation. This has happened as a breakaway gap and we are all likely to see continuation of this up move.

Broadly speaking, given the current set up, we might see this breakout resulting into a short phase of fresh up move, we also cannot discount the possibility of small throw backs occurring. Traders and Investors are required to mitigate these risks of throwbacks happening in this otherwise bullish environment. These can be done with choosing stocks very selectively, rotating sectors and remaining vigilant at higher levels. Overall, positive outlook is advised for the day.

STOCKS TO WATCH:

Long positions were seen being added in stocks like FEDERAL BANK, AXIS BANK, BEL, EQUITAS, TV18BROADCAST, DABUR, JINDAL STEEL, DHFL, KOTAL BANK, RELIANCE, TATA POWER and HINDZINC.

(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

Saturday, May 5, 2018

WEEKLY MARKET OUTLOOK FOR MAY 07 THRU MAY 11, 2018

Friday, May 4, 2018

MARKET OUTLOOK FOR FRIDAY,MAY 04, 2018

Thursday, May 3, 2018

MARKET OUTLOOK FOR THURSDAY,MAY 03, 2018

Wednesday, May 2, 2018

MARKET OUTLOOK FOR WEDNESDAY,MAY 02, 2018

Monday, April 30, 2018

MARKET OUTLOOK FOR MONDAY,APR 30, 2018

Copy Disabled

No copy