Saturday, March 4, 2017

MARKET TREND FOR FRIDAY, MARCH 03, 2017

MARKET TREND FOR FRIDAY, MARCH 03, 2017
Indian Equity Markets did everything that it could do in yesterday’s session. Following a strong global equity setup, the benchmark NIFTY50 opened higher and advanced towards 9000-mark while forming 8992.50 as its intraday high. However, as we had mentioned categorically in our Thursday’s note, NIFTY witnessed a very volatile and sharp corrective action and lost over 100-odd points from the high point of the day before ending with net loss of 46.05 points or 0.51%. As it was very much expected, the NIFTY has confirmed the Double Top resistance zones of 8930-8950 levels and for the immediate short term, it has marked these levels as its intermediate top. Today, we expect a subdued start to the Markets and we might continue to see NIFTY consolidation in capped range with downward bias. However, the buy-on-dips structure of the Markets has not been altered.

For today, the levels of 8940 and 8990 shall act as immediate resistance levels. Supports will come in at 8835 and 8780 levels.

The Relative Strength Index – RSI on the Daily Charts is 64.6622 and it has just moved below from a topping formation. Apart from this, it remains neutral showing no bullish or bearish divergence or any failure swings. The Daily MACD stays bearish as it trades below its signal line.  On Candles, a Bearish Engulfing line has occurred. If read in the present context, this has occurred after a significant up move and therefore, it has marked an intermediate top. However, this requires confirmation but the present candle is long enough to at least halt the present up move.

The NIFTY March futures have shed over 3.36 lakh shares or 1.50% in Open Interest. This shows some minor profit taking from higher levels but this figures is not large enough to signal any notable shift in the sentiment of the market participants.

While having a look at pattern analysis, it can be clearly be concluded that NIFTY has, as of now, confirmed the Double Top resistance zone of 8930-8950 and has marked these levels as an intermediate top. For a sustainable up move to occur, NIFTY will have to move past these levels. Until this happens, we will continue to see the NIFTY trapped in corrective activities and range bound consolidation.

All and all, while a subdued activity is expected in the initial trade, we advice to refrain from attempting to short the Markets as corrective activities tend to remain shallow in a strong market. However, with an intermediate top being marked, aggressive exposures should be avoided and cash levels should be kept higher than normal. Dips may be continued to be utilized to make selective purchases but sector rotation too needs to be closely monitored. While keeping overall exposures moderate, cautious view on the Markets 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 

MARKET TREND FOR THURSDAY,MARCH 02, 2017

MARKET TREND FOR THURSDAY,MARCH 02, 2017
Fuelled by stronger than expected GDP data which belied the expected adverse effects of demonetization, the Markets saw some upsurge as the NIFTY ended the day gaining 66.20 points or 0.75%. This was further aided by very buoyant global equity set up. Here, at this juncture, there are some important factors that one needs to take care of. There is no doubt that liquidity is severely chasing the Markets but with the end of the yesterday’s session, the NIFTY has halted precisely near the Double Top resistance of 8940-8950 zones. We had mentioned these levels in our yesterday’s note and the Markets have halted their up-move very near to these levels. However, today, we might see a positive opening and Markets may trade positive in the initial session and even test 8970-9000 mark but situation might warrant deep attention towards Close. Possibility of the Markets paring gains, if at all there are any, towards the end may not be ruled out. It would be wise not to give a frenzied chase to the Markets until it consolidates a bit given the slightly overbought nature of the Markets.


For today, the levels of 8990 and 9025 will act as immediate resistance levels for the Markets. The supports come in much lower at 8865 and 8810.

The Relative Strength Index – RSI on the Daily Chart is 70.6383 and it trades slightly overbought. The NIFTY has set a fresh 14-period high whereas the RSI has not yet and this has resulted into a Bearish Divergence on this oscillator. The Daily MACD still continues to remain bearish while trading below its signal line.

On the derivative front, the NIFTY March futures have massive 11.44 lakh shares or 5.37% in Open Interest. This indicates very strong undercurrent in the Markets.

The pattern analysis shows that the NIFTY has ended at its Double Top pattern resistance at Close levels. Though it still rules its immediate highs and upward moves cannot be ruled out, these levels at Close needs to be critically monitored. We will continue to see the up surge in the Markets given the frenzied chase by liquidity but that will make the Markets vulnerable to profit taking bouts from higher levels. Though we do not rule out continued surge in the Markets, every up move will make NIFTY vulnerable to profit taking bouts as the NIFTY seems overextended at present.

Overall, we reiterate that the undercurrent remains extremely buoyant and we expect the NIFTY to extend its gains, at least in the initial session. However, having said that, as the Markets once again approaches the 9000-mark, the protection of profits at those levels will remain immensely important. We recommend highly vigilant protection of profits at higher levels while dips may be continued to be used for making highly selective stocks specific purchases.

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 

MARKET TREND FOR WEDNESDAY,MARCH 01, 2017

MARKET TREND FOR WEDNESDAY,MARCH 01, 2017
Though the Markets remained yesterday in a falling trajectory, the NIFTY saw range bound movements in a range bound manner and the Markets continued to positively consolidate while it ended the day with a minor loss of 17.10 points or 0.19%. The consolidation was evident and so was the bullish undercurrent that the Markets had to put on display. Today, we expect a positive start to the Markets. Though the levels of 8930-8950 will continue to act as immediate resistance at Close levels, the bullish undertone will keep the downsides limited. The better-than-expected GDP numbers that came out will further fuel this strong underlying sentiment. Today as well, though the NIFTY remaining in consolidation cannot be ruled out the downsides will remain limited and all corrective activities are likely to get bought into.

For today, the levels of 8910 and 8950 will act as immediate resistance levels. The supports will come in at 8835 and 8810 levels.

The Relative Strength Index – RSI on the Daily Chart is 66.5061 and it remains neutral as it shows no bullish or bearish divergence as against the price or any failure swings. The Daily MACD is still bearish while it trades below its signal line. However, it has flattened its trajectory. On Candles, no significant formations were observed.

On the derivative front, the NIFTY March series have shed just over 50,250 shares or 0.24% in Open Interest. This figure is small and very insignificant to suggest any apparent change in underlying sentiment.

While having a look at pattern analysis, the NIFTY has clearly marked the 8930-8950 zones as a Double Top at Close levels. At the same time, it has shown very little retracements at Close levels and all the consolidation and minor corrective activities have remained more in the form on intraday oscillations. It is evident and clear that further upsides will occur only after the NIFTY clears this Double Top resistance above the prescribed levels.

All and all, a positive start is expected and a boost to the already buoyant sentiments cannot be ruled out with the better-than-expected GDP numbers. While this will certainly aid a positive expected start, the levels of 8930-8950 will still continue to hold as immediate important pattern resistance levels. The outperformance in Mid Caps is likely to continue and also some sector specific out-performance cannot be ruled out. Overall, with each corrective dip, stock specific purchases may be made in moderate quantities. While maintaining enough cash until the Markets breach the prescribed pattern resistance, a positive 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 

MARKET TREND FOR TUESDAY, FEBRUARY 28, 2017

MARKET TREND FOR TUESDAY, FEBRUARY 28, 2017
While ending the day with a modest loss the benchmark NIFTY50 not only ended its winning streak but also entered into consolidation while confirming the zones of 8920-8950 as a major area resistance in form of a Double Top. We expect the consolidation to continue and also see the 8920-8950 zones as an immediate resistance to the NIFTY at Close levels in the immediate short term. We expect a flat start to the Markets today. The trade is likely to lack any directional bias in the early part of the session and therefore the trajectory that the Markets form post opening will remain crucial to watch for. The downsides to the Markets will remain limited but the consolidation is likely to continue to infuse some volatility and broad range bound oscillations in the Markets.

For today, the levels of 8940 and 8995 will act as immediate resistance levels while the supports come in at 8825 and 8775 levels.

The Relative Strength Index – RSI on the Daily Chart stands at 68.8297 and it has just move below a topping formation. It remains neutral showing no failure swings or any divergence against the price. The Daily MACD has reported a negative crossover and it is now bearish while trading below its signal line. On Candles, no major formations are observed.

On the derivative front, the NIFTY March Futures have shed over 4.65 lakh shares or 2.13% in Open Interest. This shows some amount of unwinding of long positions and some profit taking from higher levels.

While having a look at pattern analysis, it is clear that the NIFTY has confirmed and marked the zones of 8920-8950 at a major pattern resistance in form of a Double Top at Close levels. With this, these levels have become an immediate resistance and minor top for the Markets for the immediate short term. Unless these levels are surpassed at Close, we will continue to see the NIFTY under range bound consolidation and is likely to remain volatile as well.

All and all, given the confirmation of a resistance zone, we advice to refrain from creating any major exposures in the Markets. The NIFTY is likely to lack directional bias for some sessions and is likely to remain in consolidation. Such consolidation is likely to be in the form of a range bound oscillations and this will induce some volatility in the Markets as well. Overall, in all likelihood, the Markets will continue to remain vulnerable to profit taking bouts from higher levels and negativity is likely to persist. Though it is likely to remain temporary in nature, cautious outlook along with preservation of cash 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 

MARKET TREND FOR MONDAY, FEBRUARY 27, 2017

MARKET TREND FOR MONDAY, FEBRUARY 27, 2017
The Indian Equities had a volatile session on Thursday as the benchmark NIFTY50 ended with minor gains of 12.60 points or 0.14%  after witnessing a typically rollover dominated and induced volatility in the session. Today, the Markets are likely to see a tepid and modestly negative start as it would begin the week while being in overbought territory and also being very near to a major pattern area resistance in form of a Double Top on the Close Charts. Without disputing the fact that the undercurrent still predominantly continues to remain buoyant, we see all the possibilities of some sharp and volatile corrective activities taking place and the behavior of the Markets vis-à-vis the 8960-9000 zones will remain immensely important.

For today, 8975 and 9005 will act as immediate resistance levels for the Markets. The supports come in lower at 8865 and 8810 levels.

The Relative Strength Index – RSI on the Weekly Chart is 74.9121 and it do not show any failure swings. However, the NIFTY has continued to set a fresh 14-period high while the RSI has not and this has resulted into Bearish Divergence. Further, this trades in overbought territory as well. The Daily MACD is bullish post reporting a positive crossover and it trades above its signal line. No significant formation on Candles is observed.

The pattern analysis clearly shows the NIFTY approaching one of its major pattern resistances. The level of 8948-8950 zones is a major pattern area resistance for the NIFTY in form of a Double Top. Even with the bullish underlying intentions, there are all the chances that the Markets see some temporarily halt to the up move and see itself once again into some consolidation. Some profit taking bouts from higher levels and some range bound consolidation cannot be ruled out.  

Overall, we expect the NIFTY to once again face some broad ranged consolidation. This will keep the sessions in coming days relatively more volatile. At the same time, we also see such expected consolidations and corrective activities help the Markets gather further impetus for possible up move again. Given the underlying buoyant structure on the Charts, we very strongly recommend to refrain from creating major short positions. Every corrective dip is likely to offer opportunities for select stock picking. With volatility expected to rule the roost, positive caution is advised for the day.

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 MARKET OUTLOOK FOR FEBRUARY 27 THRU MARCH 03, 2017

WEEKLY MARKET OUTLOOK FOR FEBRUARY 27 THRU MARCH 03, 2017
The Markets on Thursday saw sharp volatility especially in the second half of the session which was much because of the expiry led rollovers. With the short week that came to an end on Thursday, the NIFTY posted decent gains of 117.80 points or 1.34% on Weekly basis. This Week also remained highly eventful as the NIFTY posted fresh 52-week highs while it also approached key resistance area. On the top of it it formed some interesting patterns  as well. In the Week that went by, NIFTY continued to advance to its logical expected targets of 9000-mark as it posted its Weekly high of 8982.15. In this short week, the Markets has ensured that we see the coming next week remaining as eventful and volatile as  the previous week. On Monday, we see a tepid start to the Markets and some modestly negative opening will be expected. The 8968-9000 zones will remain key resistance area for the immediate short term. We can see some corrective activities persisting and this will also lead to some existance of sharp volatility in the Markets.

For the coming week, the levels of 8990 aand 9195 will be the broad resistance area  for the Markets. The supports will be seen coming around 8845 and 8750 levels.

The Relative Strength Index – RSI on the Weekly Chart is 65.8732 and it has reached its highest value in last 14-periods which is Bullish. It does not show any bullish or bearish divergence as against the price. The Weekly MACD remains bullish as it trades above its signal line. No major formations have been observed on Candles.

The pattern analysis presents very interesting picture. It is quite evident and beyond doubts that the NIFTY on the Daily Chart is overbought and has approached its key pattern resistance in form of a Double Top. However, moving back to the Weekly Charts, the patterns presents a relatively bullish picture. To begin with, on the Weekly Charts as well the NIFTY has approached its major pattern resistance area of 8960-9000 zones. It has made a Double Top formation spanning over nearly eight months. However, if this pattern is viewed on a larger note, it has made a Potential Inverse Head and Shoulder formation. It is extremely important to note that this is a not-so-classice but quite Complex Inverted Head and Shoulders formation which requires validation over coming days. In the immeidate short term, we just cannot rule out Markets resisting to the 9000-mark while it consoldiates in a broad range are are likely to result into intermittant volatile profit taking bouts.

 Overall, even if the Weekly Charts show some more room to move up, the serious pattern area resistance on the Weekly Charts and the overbought nature of the Markets on the Daily Charts are all likely to prevent any runaway rise in the Markets. There is a frenzied chase by liquidity but the current structure of the markets will certainly infuse great amount of volatility in the coming week. We should be ready to brace and tackle sharp volatile movements on either side in the coming week while remaining highly stock-specific in the Markets.

A study of Relative Rotation Graphs – RRG clearly show IT Pack has been steadily losing momentum on week-on-week basis. Though it remained highly volatile on account of buy-back news and even if it remains volatile on daily basis, on a Weekly note it is likely to lose momentum. The REALTY and FMCG pack will see relative outperformance coming in with some contribution from SMALL CAP pack as well. Despite some stock-specific out performance, the METAL and ENERGY pack will continue to show weakening momentum as compared to NIFTY. Underperformance from PHARMA is likely to persist. Some attempts to consolidate and score on relative outperformance will be seen from AUTO Pack in the coming week.

 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