Wednesday, February 8, 2017

Daily Market Trend Guide -- Wednesday, February 08, 2017

MARKET TREND FOR WEDNESDAY, FEBRUARY 08, 2017
Though with less intensity, first signs of some overdue correction in the Indian Equities became evident as the benchmark NIFTY50 ended the day with modest losses of 32.75 points or 0.37%. Today, we expect a subdued opening in the Markets and the analysis remain more or less on similar lines as we expect some corrective activities to continue. Markets will also react to the RBI Credit Policy Review which comes up later as we go ahead in the session. Rate cut of 25 bps is expected but overall this is likely to remain a non-event. Bank stocks anyway are  trading  extremely overbought and may find any reason for impending corrective activities. For immediate short term, 8820 has now become a important resistance to watch out for.

For today, the levels of 8820 and 8865 will act as immediate resistance levels. The supports will come in lower at 8720 and 8675 levels.

The RSI—Relative Strength Index on the Daily Chart is 71.5979 and it is neutral as it shows no bullish or bearish divergence or any failure swings. However, it still continues to trade in “overbought” territory. The Daily MACD remains bullish trading above its signal line but has started to flatten its trajectory. On the Candles, an Engulfing Bearish Line has occurred. This is significant because it has formed during an up move and it markets a potential halt in the current up move. It is an indication that the momentum has started to shift to bearish hands.

The NIFTY February futures saw shedding of over 2.85 lakh shares or 1.31% in Open Interest. This shows minor profit taking from higher levels.

While having a look at pattern analysis, the NIFTY50 is very near to its major pattern resistance levels. Though these levels fall ahead of the current closing level, the overbought nature of the Markets is causing impediments for upward moves. The lead indicators have been overstretched over past couple of days and this makes the immediate structure of the Markets slightly dangerous and unhealthy. Though there are no signs of reversal of trend at current levels, some amount of correction from the current levels cannot be ruled out.

All and all, it is important to note that corrections within an uptrend are healthy phenomenon and often prepares Markets for further up moves. Minor corrective activities are likely to continue but NIFTY may still proceed to test its logical targets of 8850-8900 mark in coming days. But currently, given the overbought nature of the Markets, some correction will be imminent and continues to remain overdue. We continue to reiterate adopting highly cautious approach to the Markets and vigilantly protect positions at higher 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



+91-98250-16331 

Tuesday, February 7, 2017

Daily Market Trend Guide -- Tuesday, February 07, 2017

MARKET TREND FOR TUESDAY, FEBRUARY 07, 2017
The benchmark NIFTY50 had a better than expected session as it continued to over-stretch itself while being in overbought territory as it ended yet another day with gains ending 60.10 points or 0.69% higher.  At this juncture, we very explicitly raise a word of caution. We do not dispute the underlying buoyancy in the Markets but in the same breath, the way the NIFTY is overbought and the manner in which the lead indicators are overstretched, some corrective activity from higher levels is very much long overdue. While raising the cautious undertone, we explicitly point out not to ecstatically chase the rally as this is now getting bit unhealthy. Some corrective action, in form of some consolidation would be in fact healthy for the Markets to help it move higher than current levels.

The levels of 8830 and 8865 will pose resistance to the Markets and the supports will exist much lower at 8735 and 8660 levels.

The RSI—Relative Strength Index on the Daily Chart is 75.1939 and it has posted a fresh 14-period high which is bullish. However, we cannot ignore the fact that it is trading highly overbought. The Daily MACD continues to trade above its signal line. On Candles, a rising window (gap) has occurred. Though it is a bullish undertone, the overbought nature of the Markets cannot be ignored and we have to approach this formation with great amount of caution.

The NIFTY February futures have added over 3.68 lakh shares or 1.71% in Open Interest which implies continuing buoyancy in the Markets.

While coming to pattern analysis, the way the buoyant undertone is evident, we cannot discount the fact that the NIFTY is trading highly overbought. The lead indicators are evidently overstretched and therefore it is clear that such ecstatic chase of the up move can be turn dangerous as the corrective activities too tend to be equally sharp. While we accept and acknowledge the fact that the overall trend remains unanimously on the upside, some short term correction is long overdue and it would be required to make the Markets healthy. The Bollinger Bands are nearly 46% wider than normal indicating high prevailing volatility. It also increases the chances of the NIFTY returning in a consolidation range.

Overall, we now strongly advise to approach the Markets with highly levels of caution. We strongly recommend refraining from creating any fresh long positions and protect profits wherever applicable. The unabated rise while remaining overbought can become unhealthy and can induce short term but sharp corrective actions. Remaining light on positions or reducing positions with each higher levels and adopting cautious outlook is advised for today.

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 

Monday, February 6, 2017

Daily Market Trend Guide -- Monday, February 06, 2017

MARKET OUTLOOK FOR MONDAY, FEBRUARY 06, 2017
The benchmark NIFTY50 heavily consolidated on Friday as it spent the entire day oscillating in a very narrow 20-odd points range and finally ending the day flat with minor gains of 6.70 points or 0.08%. Today, as we go into the fresh week, the Weekly Chart display absolutely buoyant intent but the Daily Charts remain “overbought”. We are expected to see a stable and positive opening and we expect the Markets to trade steady in the initial trade. However, as we go ahead in the session, we might also see some profit taking from higher levels as corrective actions;  however shallow, remain imminent. The lead indicators on the Daily Charts show some weariness and are overstretched.

The levels of 8750 and 8810 will remain immediate resistance level for the Markets. The supports come in at 8675 and 8610 levels.

The Relative Strength Index – RSI on the Daily Chart is 72.8722 and it continues to trade in overbought territory. Though it does not show any failure swing, the NIFTY has marked fresh 14-day which while RSI has not. This is formed a Bearish Divergence. The Daily MACD stays comfortably bullish while trading above its signal line. A Spinning Top that has occurred on the Candles continue to show some indecisiveness on part of market participants.

The NIFTY February Futures have shed over 1.72 lakh shares or 0.80% in Open Interest. This shows some minor profit taking at higher levels but this figure, individually, is insignificant to show any change in underlying sentiment.

The pattern analysis continues to show overstretched picture on the Daily Chart. The patterns show very strong undercurrent as the NIFTY is witnessing very shallow corrections intraday while oscillating in a very capped range while it continues to remain flat on Close levels. However, it also makes very evident that the lead indicators show some clear signs of weariness and possible loss of momentum, though very much temporary. Some signs of fatigue indicate that there might be some more oscillations within a defined range and this will be in fact healthy for the Markets.

Overall, the NIFTY continues to track the upper limits of the Bollinger Bands which are over 40% wider than normal. Under buoyant circumstances, normally the NIFTY may continue to track it but the overbought nature of the Markets may see some corrective activities. We recommend using such dips to make quality purchases by effectively rotating the sectors. Overall, while some correction would be in fact healthy for the Markets, the underlying current continues to remain evidently buoyant.

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 

Weekly Technical View - NIFTY - February 06 thru February 10, 2017

WEEKLY MARKET OUTLOOK FOR FEBRUARY 06 THRU FEBRUARY 10, 2017
For the week ending Friday, the benchmark NIFTY50 has ended the week with net gains of 99.70 points or 1.15%, with the Budget Day rally contributing to the positive ending of the Week. The way we had mentioned in the previous Weekly Note, this week as well, the NIFTY50 has continued to throw divergent signals on the Weekly and Daily Chart. It stays “overbought” on the Daily Chart, whilel it stays poised for further up move on Weekly Chart. What it has demonstrated in most unclear terms is it underlying bouyancy which is refusing to go away fuelled by one of the most level-headed Budget and supported by in-place macro fundamentals and strong global equity set-up. The coming week will see a stable start and going down the line we cannot rule out consoldiation and intermittant profit taking bouts from higher levels but in most likelihood, we may see NIFTY advancing towards 8850-8900 levels.

In the coming week, 8790 and 8900 will act as immediate resistance while the levels of 8675 and 8610 will bring in supports.

The Relative Strength Index – RSI on the Weekly Charts is 61.3354 and it has reached its highest value in last 14-periods which is Bullish. It does not show any divergence against the price. The Weekly MACD is Bullish as it trades above its signal line. No major formations on Candles are observed but generally speaking white candles usually imply continuation of the trend in the current direction unless a reversal bar / candle is formed.

Pattern analysis on the Weekly Charts presents ever clearer picture. After retracing nearly 50% of its prior up move, the NIFTY has successfully resumed its up move. The current bands are in line with the NIFTY’s normal volatiliity and therefore further suggests the clarity of the pattern. The Weekly Close of the NIFTY above the SMA shows increased possibility of the Markets advancing towards the upper band which can be its next logical targets. So, either in this Week or the next, the possibilities of the NIFTY testing the 8850-8900 levels cannot be ruled out.

All and all, the overbought nature of the Markets on the Daily Charts may cause it to oscillate in a given range while it consolidates. But on week-on-week basis, the up trend remains intact. Baring some range bound consolidation, we can expect the current trend to continue. With the given bouyant nature of the Markets remaining intact, all dips should be utilized to make selective quality purchases while also protecting profits in existing positions. The dips can be squarely utilized to make rotational select purchases in the sectors which relatively underperformed and may outperformed in coming Week.

A study of Relative Rotation Graphs – RRG shows considerable loss of momentum of the CNXIT following developments on the H1B Visa front in the US. Though this reaction might be knee-jerk, the relative loss of momentum will remain visible this week as well. Though the IT Stocks are now expected to consolidate and seem to have digested these developments. Relative outperformance will  remain evident in FMCG and REALTY stocks. INFRA stocks too are likely to relatively fare better. PSUBANKS are likely to arrest the loss of momentum and look upwards. PHARMA are likely to remain sluggish on Weekly basis and so will be the Metals who might exhibit some slowdown.

 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, 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 



Daily Market Trend Guide -- Friday, February 03, 2017

MARKET OUTLOOK FOR FRIDAY, FEBRUARY 03, 2017
It seems we have once again entered a period of positive consolidation as the benchmark NIFTY ended the day with a modest gain of 17.85 points or 0.20%. The Markets saw volatile movements on either side as a recovery was seen from the low point of the day and the last hour of the trade also saw rapid paring of gains. Today, we expect a quiet start but in the same breath, consolidation coupled with volatile movements on either side will also be seen. The NIFTY50 has fiercely consolidated at Close levels and it will continue to do so in immediate short term while also continuing to put underlying strong undercurrent on display.

For today, the levels of 8750 and 8785 will act as immediate resistance for the Markets. The supports will come in at 8660 and 8610 levels.

The Relative Strength Index – RSI on the Daily Chart is 72.6067 and it does not show any failure swing. It continues to trade in overbought territory. It also continues to portray Bearish Divergence on the Charts as the NIFTY has made a fresh 14-period high while RSI has not. The Daily MACD stays bullish while trading above its signal line. A Spinning Top on the Candles an indecisive session and the overbought nature of the Markets may temporarily halt the up move.

The NIFTY February series have further gone on to add over 7.98 lakh shares or 3.83% in Open Interest. This continues to show buoyant intent of the Markets.

The pattern analysis evidently shows that despite the buoyant undercurrent and strong structure, the lead indicators seem overstretched. We may see continued up moves but that will not be without any profit taking from higher levels. There are good amount of chances that the NIFTY once again oscillates in a defined range with an upward bias. The NIFTY tracking upward Bollinger Band while remaining overbought broadly suggest some imminent range bound correction.

Overall, with the lead indicators remaining overstretched and the NIFTY trading in overbought territory, we may not see any runaway rise in the immediate short term. Some amount of healthy correction would be welcome and even imminent. A minor corrective activity in form of a range bound oscillation cannot be ruled out. At the same time, it is equally important to note that the downsides will remain limited and the corrections will remain extremely shallow as the overall trend remains intact.

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