Tuesday, March 21, 2017

MARKET OUTLOOK FOR WEDNESDAY, MARCH 15, 2017

MARKET OUTLOOK FOR WEDNESDAY, MARCH 15, 2017

In line with the broad-based expectations, the NIFTY achieved a comprehensive breakout today while it ended the day with a robust gain of 152.45 points or 1.71%. Very much on expected line, the benchmark NIFTY50 saw a gap up opening and spent the entire session trading absolutely in sideways trajectory while ending the day near its opening levels. There are several factors that we now need to take into account. NIFTY has given a breakout and today, we expect a positive opening and therefore the uptrend to continue. On the other hand, though there is a breakaway gap with much higher volumes confirming the bullish continuation, the NIFTY is once again over-bought on the Daily Charts and therefore some profit taking at higher levels in form of ranged consolidation can also be expected. This increases the chances of some amount of throw back as well while keeping the overall up trend intact. Also, the near-imminent hike the US Interest Rates will also have its faint shadow on the Markets though NIFTY is all set to put up a resilient face against this and has nearly discounted the impending hike.

For today, the levels of 9145 and 9220 will act as immediate resistance levels for the Markets. The supports come in at 9060 and 8985 levels.

The Relative Strength Index – RSI on the Daily Chart is 74.0176 and it now trades in overbought territory. The NIFTY has set a fresh 14-day high while RSI has not and this has caused Bearish Divergence on the Daily Charts. The Daily MACD is still yet to report any positive crossover and is currently bearish trading below its signal line. On the Candles, a very significant formation of A Rising Window has occurred. This is a gap and with this occurring with heavy volumes, it may cause the upward  trend to continue.

The NIFTY March futures have added over 18.43 lakh shares or 7.89% in Open Interest. This too is a strong indicator of continuing buoyant uptrend in NIFTY in coming days.

Coming to pattern analysis, the NIFTY tested its all important Double Top resistance previous month and since then created a important congestion area while continuing to see range-bound consolidation. It has reported a clear breakaway gap on the upside and this clearly implies the upward momentum to continue.  The NIFTY closed above the upper Bollinger Band by over 12.20% with the prices breaking the upper band and confirmed upside breakout is possible.

All and all, the visual inspection of the patterns on the Charts, a clear breakaway gap on the upside and the F&O data all collectively point towards continuation of the uptrend in coming days. However, the only factor that would raise caution is the nearly-discounted US Fed decision that is coming up later tonight and the overbought nature of the Markets. This may cause some throw-back to occur on the Daily Charts. Apart from this, sectoral and stock-specific rotation will remain visible. While guarding profits at higher levels vigilantly, positive outlook is advised for today.

 (Milan Vaishnav, CMT, is Consultant Technical Analyst at Gemstone Equity Research & Advisory Services, Vadodara. He can be reached at milan.vaishnav@equityresearch.asia)
Milan Vaishnav, CMT 
Technical Analyst 
(Research Analyst, SEBI Reg. No. INH000003341)

Member
Market Technicians Association, (MTA), USA
Canadian Society of Technical Analysts, (CSTA), CANADA



+91-98250-16331 

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