Gemstone Equity Research & Advisory Services

Friday, May 11, 2018

MARKET OUTLOOK FOR FRIDAY,MAY 11, 2018

MARKET OUTLOOK FOR FRIDAY,MAY 11, 2018

As outlined in our previous note about the importance of the resistance level of 10785, the NIFTY resisted precisely to that level in Thursday’s trade marking the high of 10785.55. NIFTY saw paring 80-points from that level and settled the day with minor loss of 25.15 points or 0.23%. The underperformance was seen more in broader Markets which lose anywhere in the range of 0.40% to 1.89%.

As we approach end the week, the NIFTY is going to face stiff resistance to the 10785 mark and this level will be marked as immediate major resistance are for the Markets for the immediate short term. That being said, we would also like to reiterate that with the amount of consolidation that is being seen and the way NIFTY is resisting any major downsides, it is gathering strength for the long run.

The levels of 10750 and 10785 will act as immediate resistance area for the Markets. Supports come in at 10685 and 10650 zones.

The Relative Strength Index – RSI on the Daily Chart is 62.4278 and it stays neutral against the price showing no divergence. The Daily MACD still remains bullish while trading above its signal line. On the Candles, a black body occurred. Its emergence exactly near the resistance area marks the credibility of the resistance level of 10785.

The pattern analysis shows consolidation occurring in the 10650-10785 zones after a breakout from the rectangle formation. If the Markets suffer a complete throw back, the levels of 10500 should act as important support. However, given the resilience that NIFTY is showing to any downsides, we expected this consolidation in a limited range to continue.

We believe there is still some room left for such range bound consolidation to continue. It is also important to note that given the fact that NIFTY has remained resilient to any major downsides so far, this should be viewed as underlying strength. We expect such consolidation to continue. Any downsides, if any, shall remain limited and any such down moves should be utilized to make fresh purchases. However, focus is likely to remain on defensive sectors until Markets achieves a fresh breakout. We recommend making select purchases in defensives with each down move but still continue to keep overall positions at moderate levels. Cautious view is advised until the level of 10785 is breached on the upside.

STOCKS TO WATCH:

Short positions were seen being added in FEDERAL BANK, DISH TV, IDEA, BHEL, JAIN IRRIGATION, SAIL, PFC, PNB, TATA MOTORS, AMBUJA CEMENTS, TATA MOTORS, ASHOK LEYLAND, NTPC and NCC.

(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 10, 2018

MARKET OUTLOOK FOR THURSDAY,MAY 10, 2018

MARKET OUTLOOK FOR THURSDAY,MAY 10, 2018

After a brief pause and a tepid start to the day, the Wednesday’ session saw some advancement in the NIFTY as the Index ended the day gaining 23.90 points or 0.22%. Bulk of the gains came in the second half of the session though the session remained dominated with highly stock specific activities. However, despite putting on modest gains, the NIFTY still remains little bit away from the immediate past high of 10785.

As we step into Thursday’s trade, we expect a quiet start to the day. If there are no overnight surprises, we expect NIFTY to inch higher and attempt to test the 10785-mark. However, this level will still continue to pose and act as immediate resistance level for the Markets which is important enough to push Markets into some more consolidation.

The levels of 10785 and 10830 will act as immediate resistance area for the Markets. Supports are expected to come in at 10710 and 10660 zones.

The Relative Strength Index – RSI on the Daily Chart is 65.0525. RSI shows bearish divergence against the price as it did not mark a 14-period high while the NIFTY ended on a 14-year high on Closing basis. No significant formations were seen on Candles.

Having a look at pattern analysis, it becomes evident that the brief consolidation that the Markets witnessed after testing immediate past high level of 10785 has in fact lent some strength to the Markets. Instead of facing a outright throwback and testing the breakout levels, NIFTY has chosen to consolidate in a given range.

We believe modest up move will continue in the Markets. Having said this, with the NIFTY still not having moved past the 10785-mark, this level is still supposed to be regarded as important resistance levels for the Markets. There are possibilities that the NIFTY might show an up move and attempt to test those levels. However, it still remains vulnerable to be pushed into consolidation once again from those levels. Fresh sustainable up move shall occur only after NIFTY moves past the 10785-mark comprehensively.