Gemstone Equity Research & Advisory Services

Thursday, May 25, 2017

MARKET OUTLOOK FOR THURSDAY, MAY 25, 2017

MARKET OUTLOOK FOR THURSDAY, MAY 25, 2017

In our yesterday’s note, we had mentioned about the importance of levels of 9380-9400 in the immediate short term. On Thursday, the benchmark NIFTY50 managed to stay afloat above these zone for the major part of the session but the last hour and half of trade saw the NIFTY slipping and ending the day notch below this levels. The NIFTY lost 25.60 points or 0.27%. We enter the expiry of the current derivative series. The zone of 9380-9400 still remains critical to watch out for. Though the session will remain dominated with rollover centric activity, it would be critically important for the Markets to crawl back above 9380-9400 in order to avoid further weakness from creeping in.

The levels of 9400 and 9465 are immediate resistance levels today. The supports come in lower at 9330 and 9280.

The Relative Strength Index – Relative Strength Index on the Daily Chart is 53.4156. Bearish divergence has once again emerged as the RSI has set a fresh 14-period low while NIFTY has not yet. The Daily MACD is bearish as it continues to trade below its signal line.

The pattern analysis in the Close charts show the Markets taking a downward breach from expected lines from the sharp wedge it had created. NIFTY has retraced after it tested the rising trend line drawn from 9200 levels. In the process, it has marked 9532 as its immediate top for the immediate short term.

The expiry day is very much likely to instill volatility in the session. The NIFTY remains oversold on the Stochastic and it has seen OI increasing over previous two days of decline. This indicates creation of shorts which may lend some stability in the close vicinity of these levels. We reiterate to avoid shorts and preserve cash. Dips should be utilized to make select purchases. Some stability, even if temporary, can be expected in close vicinity of current levels.

Milan Vaishnav, CMT

Technical Analyst

(Research Analyst, SEBI Reg. No. INH000003341)

Member:

Market Technicians Association, (MTA), USA

Canadian Society of Technical Analysts, (CSTA), CANADA

www.EquityResearch.asia

http://milan-vaishnav.blogspot.com

+91-98250-16331

milan.vaishnav@equityresearch.asia

milanvaishnav@yahoo.com

Wednesday, May 24, 2017

MARKET OUTLOOK FOR WEDNESDAY, MAY 24, 2017

MARKET OUTLOOK FOR WEDNESDAY, MAY 24, 2017

Corrective actions continued to dominate the trade on Tuesday as the NIFTY50 ended the day with net loss of 52.10 points or 0.55%. While going into Wednesday, we expect such corrective activity to continue. The zones of 9380-9400 are important pattern support and the behavior of the Markets vis-à-vis these levels will be important to watch for. The Markets may see a modestly positive start but the maintenance of the levels of 9380-9400 will be important and any breach below these levels is likely to keep NIFTY under corrective mode for some more time.

The levels of 9425 and 9450 will continue to pose resistance going ahead. Supports come in at 9375 and 9310 zones.

The RSI—Relative Strength Index on the Daily Chart is 55.1630 and it has reached its lowest value in last 14-periods which is bearish. Also, the RSI has set a fresh 14-period low while NIFTY has not. This has resulted into Bearish Divergence. The Daily MACD is bearish trading below its signal line. No significant formations were observed on Candles.

The pattern analysis suggests that the Markets have broken on the downside from a sharp wedge that it has created. On the Charts, it has continued to resist to the rising trend line and retracing from there once those levels were tested.

Overall, the corrective mood is likely to persist for some more time. To add to that, we enter the penultimate day of expiry of the current derivative series and this is all likely to induce volatility into the session. We reiterate our view to adopt stock specific approach and continue to keep overall exposures limited. Cash should be preserved while avoiding shorts in the Market.