Gemstone Equity Research & Advisory Services

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)

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, 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.