Gemstone Equity Research & Advisory Services: 6/3/18

Saturday, June 9, 2018

WEEKLY MARKET OUTLOOK FOR JUN 11 THRU JUN 15, 2018

WEEKLY MARKET OUTLOOK FOR JUN 11 THRU JUN 15, 2018

In our previous Weekly note, we had mentioned about NIFTY staying within a specified range and not seeing any runaway rally. In line with this analysis, the Index oscillated in a defined range and ended the Week with a modest gain of 71.45 points or 0.67% on week-on-week basis. The week that went by saw the NIFTY staying within the falling trend line which has defined a probable lower top for the Markets.

In the coming Week, the NIFTY will set aside its reactions that it had to the RBI Monetary Policy review that saw the Repo Rate increasing by 25 bps and Reverse Repo Rate at 6%. In the new Week, the focus will be to see if the NIFTY manages to move past its falling trend line which defines a lower top for the Markets. The levels of 10820-10850 will now assume critical importance as the levels to watch out for in the next week.

The coming week will see the levels of 10850 and 10975 acting as immediate resistance area for the Markets. Supports come in lower at 10550 and 10510 zones.

The Relative Strength Index – RSI on the Weekly Chart is 59.5185. It remains neutral showing no divergence against the price. It is also forming a pattern which confirms with the price pattern on the NIFTY while forming lower tops. The Weekly MACD stays bullish while trading above its signal line. On the Candles, a candle with a long lower shadow emerged. It becomes significant as it has occurred near the pattern area resistance of a falling trend line joining the lower tops. It lends credibility to the mentioned resistance area.

Overall, for any meaningful uptrend to resume, NIFTY will have to move past the 10820-10850 area and move out of a falling trend line that is forming the lower tops for the Markets. Until that happens, the defined zone of 10820-10850 will continue to resist the Markets. The F&O data suggest that we will see more of a consolidation rather than any major downsides due the shorts that still exist in the system. We recommend continuing to buy the dips while remaining very much vigilant at higher levels until the NIFTY moves past 10850-mark. The coming Week is set to remain highly stock and sector specific in nature.

A study of Relative Rotation Graphs – shows PSU Banks have significant improved on its relative momentum and will be seen attempting to outperform the general Markets and is very likely to be accompanied by BankNifty pack as well. Besides this, FMCG and Financial Services are still set to relatively out-perform the general Markets and provide leadership in event of any major up move. Broader Indices like CNX100, CNX200, CNX500, NIFTY Next 50, MidCaps, etc. are still seen deteriorating on the momentum front and this may be enough reason to prevent general Markets from any runaway up move. AUTO Pack too has lost much on the momentum front and is not expected to put up any distinct show. Stock specific out-performances can be expected from METAL, REALTY and PHARMA Packs.

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, June 8, 2018

MARKET OUTLOOK FOR FRIDAY,JUNE 08, 2018

MARKET OUTLOOK FOR FRIDAY,JUNE 08, 2018

Though the Markets came off 50-points from the high point of the day on Thursday, it still had a relatively stable and strong session. The benchmark Index NIFTY50 ended the day gaining 83.70 points or 0.78%. Though the rise was observed across the board, the stocks and sectors that were beaten down over previous days saw some value buying from the lower levels.

From the present structure on the Charts, we see possibilities of the up move continuing on Friday as well. A modestly positive start can be expected but in the same breath, the zone of 10820-10845 will offer resistance to the Markets at higher levels. At these levels, we can see Markets taking a breather and entering into some fresh consolidation before any decisive move.

Friday will see the levels of 10820 and 10850 will act as potential resistance zone for the Markets. Supports come in at 10735 and 10680 zones.

The Relative Strength Index – RSI on the Daily Chart is 58.3524 . RSI has marked a fresh 14-period high which is bullish. It does not show any divergence against the price. The Daily MACD has reported a positive crossover. It is now bullish while trading above its signal line. On the Candles, a Rising Window occurred. It is essentially a gap which implies continuation of the up move.

Pattern analysis suggests that the Markets have got some more steam left for some up move. However, these up moves will find resistance in the 10820-10850 zones as this happens to be a major pattern area resistance for NIFTY.

Overall, the momentum may persist in the Markets and we may still continue to see the dips, if any, being used to make quality purchases at higher levels. However, in the pursuit of momentum, the zones of 10820-10850 are expected to offer formidable pattern resistance for the Markets. We recommend continuing making fresh purchases with each opportunity that volatility offers, but at the same time, profit needs to be vigilantly protected at higher levels as the possibilities of some volatility and profit taking cannot be ruled out if the NIFTY tests 10820-10850 zones.

STOCKS TO WATCH:

Long positions were seen being added in SAIL, VEDANTA, CG POWER, BANK OF BARODA, ICICI BANK, POWER GRID, AXIS BANK, YES BANK, UBL, RELIANCE, TATA MOTORS, HINDALCO 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)

Thursday, June 7, 2018

MARKET OUTLOOK FOR THURSDAY,JUNE 07, 2018

MARKET OUTLOOK FOR THURSDAY,JUNE 07, 2018

Much on expected lines, the NIFTY continued with its short covering led up move and ended the day with a gain of 91.50 points or 0.86%. Though the session remained stable, some volatility was infused due to Markets reaction to RBI Monetary Policy review that came in the second half of the session.

Also as mentioned in our yesterday’s note, this remained largely a non-event apart from some volatile reactions. The RBI raised the Repo rate by 25 bps and the Reverse Repo rate to 6%.

As we approach Thursday, we expect a modestly positive start to the trade but also expect the session to remain largely range bound capped on both upper and lower sides.

Thursday will see the levels of 10725 and 10760 to act as immediate resistance to the Markets. Supports come in at 10620 and 10570 zones.

The Relative Strength Index – RSI on the Daily Chart is 53.8854 and it remains neutral showing no divergence against the price. Daily MACD stays bearish while trading above its signal line. Apart from a white body that appeared on Candles, no significant formations were observed.

The pattern analysis shows that the NIFTY has so far validated the support area of 50-DMA and 100-DMA which remain in very close vicinity of each other. In event of any ongoing consolidation, this zone is likely to provide support at Close levels.

Overall, we may see continued uptick in the Markets in the early trade on Thursday. However, with each up move, we need to cautiously guard positions as NIFTY remains vulnerable to profit taking at higher levels. There are no triggers to short the Markets and therefore, any downsides that the volatility may offer should be utilized to make select purchases. With no directional bias on either side and with all likelihood of a ranged trade on Thursday, cautious view is advised for the day

STOCKS TO WATCH:

Technically resilient setup is seen in stocks like GODREJ CONSUMER, UBL, HINDZINC, VEDL, ASHOK LEYLAND, TATA MOTORS, IDFC BANK, SAIL, TATA STEEL, DHFL and VOLTAS.

(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, June 6, 2018

MARKET OUTLOOK FOR WEDNESDAY,JUNE 06, 2018

MARKET OUTLOOK FOR WEDNESDAY,JUNE 06, 2018

The benchmark Index NIFTY50 slipped for the third day in a row as it ended the day losing 35.35 points or 0.33%. Though this loss is certainly a modest one, the kind of volatility that the session on Tuesday witnessed certainly creates some reason to get cautious in coming days. The session saw continued addition of shorts in the system; however, the last 45-minutes of the trade saw sharp short covering coming in.

The short covering that was seen in the last hour of the trade is likely to spill over on Wednesday as well. We might see some continued up move in the initial trade. However, two things remain distinctly clear. One, there won’t be any runaway up move despite shorts existing in the system; and second, the 50-DMA and 100-DMA are expected to lend important support to the Markets in event of any downsides.

Wednesday is likely to see the levels of 10630 and 10675 acting as immediate resistance area. Supports come in at 10550 and 10535. These levels represent the 100-DMA and 50-DMA of the Markets.

The Relative Strength Index – RSI on the Daily Chart stands neutral showing no divergence against the price. Daily MACD stays bearish while trading below its signal line. On the Candles, a candle with a long lower shadow emerged. In the present context, it remains significant as it has emerged near the support zone of 100-DMA and 50-DMA which remain in very close vicinity of each other.

Pattern analysis suggests that NIFTY tested the support zone wherein the two DMAs, 100 and 50, converge. They remain in close vicinity of each other and NIFTY taking support in this area triggers a mild possibility of a pullback.

In the second half tomorrow, we will have RBI Monetary Policy review to which Markets are likely to react to. Markets are seen discounting the possibilities of a 25bps rate hike. But apart from infusing some volatility in the session, this may remain a non-event. Given the amount of shorts in the system, we may see mild pullback continuing but with this the NIFTY still continue to remain vulnerable to selling at higher levels. Overall, a slightly wide ranged market with some volatility is what is expected on Wednesday. We recommend remaining very light on overall exposure while maintaining a cautious view on the Markets.

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

Tuesday, June 5, 2018

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)

Sunday, June 3, 2018

MARKET OUTLOOK FOR MONDAY,JUNE 04, 2018

MARKET OUTLOOK FOR MONDAY,JUNE 04, 2018

In our previous Daily note, we had discussed about the possibilities of the NIFTY not seeing any runaway rally after the sharp short covering bounce that it witnessed in the expiry session on Thursday. Much on the expected lines, the Friday’s session saw the NIFTY opening modestly in the green but also saw the NIFTY spending the entire session in a falling trajectory. The Index ended the day posting a net loss of 39.95 points or 0.37%.

As we approach the new week, we expect Monday to see a modestly positive opening to the trade. However, we also expect that the NIFTY will not see any major directional moves on either side. It is likely to trade in a capped range with upsides finding resistance at higher levels. Some amount of consolidation is now expected to creep in and persist for some time.

Monday is likely to see the levels of 10765 and 10790 playing out as resistance zone for the Markets. Supports come in at 10650 and 10605 zones.

The Relative Strength Index –RSI on the Daily Chart is 54.9419. RSI remains neutral and it shows no divergence against the price. Daily MACD continues to remain bearish while trading below its signal line. No significant formations were observed on Candles.

If we go by pattern analysis, it shows that the NIFTY attempted to break out of the broad trading range that it has formed over past couple of months. However, post an attempted breakout, it is witnessing some throwback. If 10600-10630 zones do not lend any immediate pattern support, it may see some more weakness creep in.

Overall, it is seen that the NIFTY has taken support on its short term 20-DMA which is at 10665. Any breach below this level at close will again push the Markets into some more consolidation and minor corrective phase. Speaking purely on technical terms, there are no triggers apart from the Monetary Policy which is slated to come in later this week that will influence any sharp move in the Markets. We recommend remaining very much stock specific and chase the momentum on in much selective manner while keeping overall exposures at modest levels.

STOCKS TO WATCH:

Long positions were seen being added in stocks like ICICI BANK, TATA MOTRS, PFC, ASHOK LEYLAND, RELIANCE, HINDALCO, TVS MOTORS, EQUITAS, ENGINEERS INDIA, UJJIVAN, HDFC and LARSEN & TOUBRO.

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

Gemstone Equity Research & Advisory Services

Saturday, June 9, 2018

WEEKLY MARKET OUTLOOK FOR JUN 11 THRU JUN 15, 2018

Friday, June 8, 2018

MARKET OUTLOOK FOR FRIDAY,JUNE 08, 2018

Thursday, June 7, 2018

MARKET OUTLOOK FOR THURSDAY,JUNE 07, 2018

Wednesday, June 6, 2018

MARKET OUTLOOK FOR WEDNESDAY,JUNE 06, 2018

Tuesday, June 5, 2018

MARKET OUTLOOK FOR TUESDAY,JUNE 05, 2018

Sunday, June 3, 2018

MARKET OUTLOOK FOR MONDAY,JUNE 04, 2018

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