Gemstone Equity Research & Advisory Services

Monday, June 18, 2018

MARKET OUTLOOK FOR MONDAY,JUNE 18, 2018

MARKET OUTLOOK FOR MONDAY,JUNE 18, 2018

Consolidation continued in Friday’s trade as the benchmark Index ended the day gaining 9.65 points or 0.09%. The Markets saw a modestly positive start but later slipped under some corrective pressure. However, NIFTY recovered 60-points from the low point of the day before ending with modest gains.

As we step into fresh week we expect a flat start to the trade. The NIFTY has been consolidating near its pattern resistance area. For tomorrow and for coming days, it would be imperative for the Markets to move past 10820-10850 zones for resumption of any meaningful up move.

Monday is likely to see the levels of 10850 and 10895 acting as immediate resistance area. Supports come in at 10765 and 10710 zones.

The Relative Strength Index – RSI on the Daily Chart is 59.3764 and it remains neutral showing no divergence against the price. The Daily MACD stays bullish while trading above its signal line. On the Candles, a candle with a long lower shadow occurred. In the present context, it holds little significance as it has occurred during an upside. However, since it has also occurred after some consolidation, it offers mild possibilities of fresh attempt by NIFTY for a resumed up move.

Going by pattern analysis, NIFTY has continued to resist to the falling trend line that begins from 11170 and then subsequently joins the lower tops. It would be critically important for NIFTY to move past the 10820-10850 zone for resumption of any meaningful up move.

Overall, the undercurrent continues to remain buoyant and the F&O data also suggests NIFTY has some more steam left and it may attempt to move past the pattern resistance area near which it is currently consolidating. However, until the levels of 10820-10850 are breached on the upside, we continue to recommend caution at higher levels and guard profits with each up move. Overall, positive caution is advised for the day.

STOCKS TO WATCH:

Long positions were seen being added in RELIANCE, WIPRO, INFOSYS, BAJAJ FINANCE, AURO PHARMA, BERGER PAINTS, TCS, KOTAK BANK, TORRENT PHARMA, TCS, GRANULES and DR REDDY.

(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 15, 2018

WEEKLY MARKET OUTLOOK FOR JUN 18 THRU JUN 22, 2018

WEEKLY MARKET OUTLOOK FOR JUN 18 THRU JUN 22, 2018

The previous weekly note discussed about the likelihood of the NIFTY attempting to move past its falling trend line resistance which joins the lower tops. In the Week that went by, the benchmark Index struggled all throughout the week in attempting to move past this pattern area resistance though it made no clear headway on the upside. The pullback that was seen on the last trading session of the week saw the benchmark index NIFTY closing week with a weekly gain of 50.05 points or 0.46%.

The coming week is likely to remain critical. The zones of 10820-10850 will continue to remain critical and in the same breath, we will see NIFTY attempting to move past the pattern resistance of this falling trend line which joins the lower tops. The coming week will also see some volatility creeping in the Markets though the undercurrent is likely to remain buoyant.

Next week will see the levels of 10890 and 10975 acting as immediate resistance levels for the Markets. Supports come in at 10765 and 10660 zones.

The Relative Strength Index – RSI on the Weekly Chart is 60.7579. The NIFTY has set a fresh 14-period high while the RSI has not and this has resulted into bearish divergence. However, in the present context, though this may restrict and resist the immediate up move but RSI is also seen trying to breakout from a pattern formation. The Weekly MACD is bullish as it trades above its signal line. No significant formations were observed on Candles.

Overall, the next week is likely to remain critical for the Markets as moving past the pattern resistance of a trend line joining a probable lower top is critically important for the Markets. We expect the Markets to remain overall range bound. The F&O data suggests that the range might get little broader but the downsides will certainly remain capped and limited. The coming week is likely to see highly stock and sector specific moves. We recommend continuing to guard profits vigilantly at higher levels. Shorts should be avoided as the undercurrent still continues to remain comfortably buoyant unless some critical supports are breached.

A study of Relative Rotation Graphs – shows that PSU banks have further improved on the relative momentum front and are expected to continue this trajectory in the coming week as well. Along with this, the Bank NIFTY pack has moved into the leading quadrant and is expected to relatively outperform. It is likely to get company from Financial Services, Services sector who are also expected to relatively out-perform. FMCG pack is likely to do well but performance may remain stock specific. Apart from this, PHARMA too are seen improving on the relative momentum front. Broader Indicess like CNX 100, CNX 200 and CNX 500 continue with its falling trajectory and this may keep any runaway up move in the general markets in check. AUTO, NIFTY Midcap Universe, Small Caps, NIFTY Next 50 too are seen continuing to deteriorate on the momentum front. No show is expected from the Media pack. IT and Realty may see sporadic out performances.

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.