Saturday, December 16, 2017

WEEKLY MARKET OUTLOOK FOR DEC 18 THRU DEC 22, 2017

WEEKLY MARKET OUTLOOK FOR DEC 18 THRU DEC 22, 2017
In our previous Weekly Outlook, we had expressed possibilities of Indian Equity Markets being pushed into some consolidation post finding resistance at higher levels. The Week that has gone by remained quite volatile on after volatile movements on either side, the benchmark NIFTY50 finally ended the Week with a net gain of 67.60 points or 0.66%. This Week’s close was aided with a sharp short covering aided by the outcome of exit polls that showed BJP retaining power in Gujarat.

Going into trade on Monday, we are likely to being a positive but volatile start to the week. In all likelihood, we might see some positive opening. Just as the Gujarat Election results / trend start trickling in on Monday, we will see the Markets reacting in a volatile manner. However, if nothing unexpected comes out of it, we will see the Markets inching higher towards its previous high. However, in the same breath, we do not see it posting meaningfully fresh highs in any case.

The levels of 10410 and 10490 will play out as immediate resistance levels. The levels of 10150 and 10090 will act as immediate supports.

The Relative Strength Index – RSI on the Weekly Charts is 61.2382 and it remains neutral showing no divergence to the price. The Weekly MACD stays bearish while trading below its signal line. A candle with a long lower shadow occurred on the Weekly Charts. This may mean bullish reversal but it requires confirmation on the next candle.

All and all, we might see some positive start but also expect volatility to remain ingrained in the system. Having said this, if we look at the pattern analysis, we still expect the levels of 10490 resist at higher levels. Also, the lead indicators like RSI remain in a lower top formation and are yet to break out from a range. We expect the short covering that took place in the week that has gone by to be effectively replaced with fresh buying. Until this happens, while selective sector specific purchases may be made, bulk of the up moves should be utilized to book and protect profits.

A study of Relative Rotation Graphs – RRG show that along with the broader Markets, the PSUBANK, MEDIA and INFRA stocks will continue to relatively outperform the NIFTY accompanied by the MIDCAPS. We will see METALS continue to lose overall momentum along with PHARMA. Also joining the likely relative outperformers will be the FMCG and NIFTY Junior Pack. Along with PHARMA, not meaningful up move is likely in AUTO and Financial Services pack on weekly bias. IT is expected to consolidate with a positive bias.

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


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