Gemstone Equity Research & Advisory Services

Saturday, April 21, 2018

WEEKLY MARKET OUTLOOK FOR APR 23 THRU APR 27, 2018

WEEKLY MARKET OUTLOOK FOR APR 23 THRU APR 27, 2018

In our previous Weekly note, we had mentioned about the possibilities of the Markets consolidating and at the same time showing resilience as compared to its global peers. While trading on expected lines, what the Markets put on display all through the previous week was classic consolidation. The Markets remained volatile, but remained within a capped range and kept recovering from the lows while showing resilience which demonstrated continuing buoyant undercurrent. NIFTY ended this week with net weekly gains of 83.45 points or 0.80%.

As we approach trade in the coming week which will also see expiry of the current derivative series, we see this consolidation spilling into the coming Week as well. With Markets still resisting at a pattern resistance area on the Daily Charts, it remains overstretched a bit and it would be no surprise if we see some corrective bouts from higher levels in coming days. Markets are still not completely done with its consolidation and some minor corrective moves should not come as a surprise to anyone.

Coming week will see the levels of 10610 and 10690 acting as resistance area. Supports are expected to come in at 10580 and 10375 zones.

The Relative Strength Index – RSI on the Weekly Chart is 57.1979. It continues to remain neutral showing no divergence against the price. Weekly MACD is bearish and it trades below its signal line. No significant formations were seen on Candles.

Pattern analysis reveals that as of now we continue to remain comfortably in the 27-month long upward rising channel. Despite a minor downward breach couple of weeks back, NIFTY has managed to crawl back once again into the upward rising channel.

Overall, next week will once again see attempts by the Markets to move out of the consolidation and inch higher. However, higher levels may not come easily and we might see some good amount of volatility creeping into the Markets once again. NIFTY PCR (Put to Call Ratio) once again remains at slightly uncomfortable levels. With consolidation imminent, we reiterate and advise to vigilantly protect profits at higher levels. Though select purchases may be made, profits should be religiously protected with each up move that the Markets may offer in coming days.

A study of Relative Rotation Graphs – shows in line with what was mentioned in our previous sectoral view, IT arrested its loss of momentum and relatively outperformed the general Markets. The broader indices like CNX100, 200, NIFTY Next 50, and NIFTY MID50 continued to show improvement in the relative momentum against the general markets and this is likely to be seen in coming week as well. Apart from this, we will see stocks from AUTO, FMCG, ENERGY and FINANCIAL SERVICES continuing to improve its relative performance. Select stocks from METAL and REALTY will see selective outperformance. Apart from this, BANKNIFTY, PSUBANKS, CNXPSE, and PHARMA are not expected to put up and major out-performance.

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, April 20, 2018

MARKET OUTLOOK FOR FRIDAY,APR 20, 2018

MARKET OUTLOOK FOR FRIDAY,APR 20, 2018

Though the Equity Markets ended with gains on Thursday, the session remained extremely range bound and the benchmark Index NIFTY oscillated in a 20-point range throughout the day making no directional headway. The Index gained 39.10 points or 0.37% but showed no conviction on either side.

As we approach the last trading day of the week, we see Friday’s trade getting initiated on a quiet note once again. The Markets are showing lot of inherent buoyancy but if we speak of immediate short term, some consolidation is now getting long overdue. It would be healthy for the Markets if it spends some time oscillating in a capped range. This will make the current pullback more healthy, sustainable and potent to scale higher levels.

The Friday’s trade will see the levels of 10580 and 10625 act as resistance levels. Supports have shifted littler lower at 10510 and 10465 zones.

The Relative Strength Index – RSI on the Daily Chart is 62.8027. While it marked a fresh 14-period high, it remained neutral against the price showing no divergence of any kind. While Daily MACD continued to stay bullish, no significant formations were observed on Candles.

Pattern analysis of the Daily Charts shows the Markets trying to break out from the pattern resistance area that it is being encountered. The Markets are trying to break out from a rectangle formation which resulted out of a broad trading range.

Overall, it is beyond doubts that the inherent buoyancy in the Markets is quite visible. However, the current structure on the Daily Charts looks bit overstretched and possibilities of a profit taking bouts from higher levels cannot be ruled out. NIFTY PCR (Put to Call Ratio) which is currently at relatively higher levels might restrict the up move as well. We strongly advise to refrain from creating shorts as the undercurrent remains bullish. However, with possibilities of Markets encountering volatile profit taking bouts at higher levels, vigilant protection of profits is advised. While adopting a very cautious view on the Markets, all profit taking bouts, if any, should be continued to be used for making select purchases.

STOCKS TO WATCH:

Fresh long positions were seen being added in VEDANTA, JSW STEEL, NATIONAL ALUMINUM, IFCI, SOUTH BANK, TATA MOTORS, GODREJ PROPERTIES, CENTURY TEXTILES, ITC, POWER GRID, LARSEN & TOUBRO and ONGC.