Saturday, July 22, 2017

WEEKLY MARKET OUTLOOK FOR JULY 24 THRU JULY 28, 2017

WEEKLY MARKET OUTLOOK FOR JULY 24 THRU JULY 28, 2017
After a volatile session on Friday, the benchmark NIFTY50 headed really nowhere on Weekly basis as it ended the week with just a modest gain of 28.90 points or 0.29%. The coming week will see the Markets continue to consolidate and do so in quite volatile manner. The coming Week is likely to see the Markets taking a breather and in event of any upward moves, it will remain extremely vulnerable to profit taking bouts at higher levels. Though the overall trend remains intact, there are signs galore that the Markets may take a breather.

The coming week will see the levels of 9980 and 10100 acting out as potential resistance levels in the event of the Markets attempting an up move. The supports will come in at much lower at 9830 and 9775 levels.

The Relative Strength Index – RSI on the Weekly Chart is 77.0688 and it remains grossly overbought. The NIFTY has marked a fresh 14-week high while the NIFTY has not and this has resulted into Bearish Divergence. The Daily MACD remains bullish while trading above its signal line. On the Candles, a Hanging Man formation has occurred. This candle has a long lower shadow and if it occurs during an uptrend which is the case with NIFTY, it often signals halt in the ongoing up move.

Given the overbought nature of the lead indicators and the overall structure of the Chart, there are ample signs that point towards likely stalling of the up move. The Bollinger Bands, which are 47% wider-than-normal on the Daily Chart also point towards limited gains on Weekly basis in the coming week. Given the overall structure of the Charts, read along with lead indicators and F&O data, we reiterate caution and feel that the Markets are likely to get pushed into consolidation for some more time.

A study of Relative Rotation Graphs – RRG show that METAL and IT stocks are likely to continue to show vigor and are likely to continue to relatively outperform the NIFTY. The REALTY, NIFTYJR, and other broader Indices distinctly continue to lose momentum. Though we may see MEDIA stocks attempt to consolidate their performance, pocket of outperformance will also be seen from PHARMA and FMCG stocks. We expect PSUANKS, MIDCAP and IFRA to drag.

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 



Friday, July 21, 2017

MARKET OUTLOOK FOR FRIDAY, JULY 21, 2017

MARKET OUTLOOK FOR FRIDAY, JULY 21, 2017
The Markets remained in a corrective mood much on the expected lines as the NIFTY declined to end the day with a modest loss of 26.30 points or 0.27%. We continue to observe absence of buying and every pullback being attributed to short covering and this factor will weigh on the sessions going ahead as well. We expect a flat start on Friday and we will see the Markets remaining range bound and oscillate within a defined range.

Friday will see the levels of 9920 and 9945 playing out as resistance levels for the day. Supports come in at 9860 and 9810 zones.

The Relative Strength Index – RSI on the Daily Chart is 65.3932 and it remains neutral showing no divergences against the price. Daily MACD remains bullish but is seen losing its momentum and sloping towards a negative crossover is such consolidation is prolonged. On Candles, a Dark Cloud occurred. This implies weakness and distinct loss of momentum on the Daily Charts.

Pattern analysis shows that NIFTY comfortably rules above the rising trend line. It is much expected that though consolidation may continue, this trend line is expected to work out as support. Any breach below this will imply more weakness for the NIFTY.

Overall, there are distinct signs that consolidation may continue. The 41.57% wider-than-normal Bollinger bands are also likely to prevent any runaway rise and may keep NIFTY remaining in a defined range for some time. We reiterate that though shorts may be avoided, long exposures too should be kept modest. Cautious approach 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 

Thursday, July 20, 2017

MARKET OUTLOOK FOR THURSDAY, JULY 20, 2017

MARKET OUTLOOK FOR THURSDAY, JULY 20, 2017
The Markets had a decent pullback on Wednesday as the benchmark NIFTY defended the 9790 level and ended the day with a decent uptick of 72.45 points or 0.74%.  Given the overall technical structure, we feel that there is high time that Markets be in some consolidation and form an area pattern before any serious up move. The very fact that the up move that we saw on Wednesday has come with decline in Open Interest and therefore it indicates that heavy short covering led to this pull back.  This has kept Markets not fully insulated from profit taking bouts in future.

Thursday will see the levels of 9910 and 9945 acting as immediate resistance levels for the Market. Supports come in at 9850 and 9790.

The Relative Strength Index – RSI on the Daily Chart is 68.6617 it stays neutral showing no bullish divergence or any failure swings. The Daily MACD is bullish and it still trades above its signal line. A big white candle occurring on the Candles have established the potency of the support area from where the NIFTY pulled back.

The pattern analysis shows NIFTY trading comfortable above the rising trend line drawn from 9200 levels. This trend line, will play out as support whenever Markets faces a corrective profit taking bout in future.

All and all, though the pullback that has occurred is has been strong, but it has occurred more because of short covering. It would be extremely essential if this gets replaced by fresh buying. Until this happens, it would be difficult for the Markets to post any significant gains going ahead. Until a comprehensive breakout is achieved, vulnerability to profit taking bouts will persist despite strong primary uptrend remaining 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 

Wednesday, July 19, 2017

MARKET OUTLOOK FOR WEDNESDAY, JULY 19, 2017

MARKET OUTLOOK FOR WEDNESDAY, JULY 19, 2017
We had categorically mentioned in our yesterday’s note that given the overbought nature of the Markets, they remain prone to sharp corrective bout. Exactly on these lines, the benchmark NIFTY50 saw a sharp corrective bout that started with a gap down opening. It finally ended the day with net loss of 88.80 points or 0.90%. On Wednesday, we expect a tepid start and the Tuesday’s low of 9790 will be critical levels to watch out for as they happen to be a pattern support for the Markets.

Wednesday will see the levels of 9650 and 9685 as important resistance levels. Supports will come in at 9790 and 9730 zones.

The Relative Strength Index – RSI on the Daily Chart is 64.0676. It has just crossed below from a topping formation. Daily MACD still remains bearish while trading below its signal line. A falling window occurred. This is essentially like a gap formation and this usually results into continuation of the downward trend.

The pattern analysis show that after NIFTY successfully moved past the rising trend line once again, on the downside, it has taken support on this trend line. The level of 9790 happens to be this pattern support and this level needs to be critically watched for.

All and all, despite some tepid start that is expected, Markets will be in for a longer corrective pressure if the levels of 9790-9770 are breached. We also expect some volatility to persist as well in the Markets. We recommend remaining very light on the overall exposures and refrain from taking over leveraged positions in the Markets.

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, July 18, 2017

MARKET OUTLOOK FOR TUESDAY, JULY 18, 2017

MARKET OUTLOOK FOR TUESDAY, JULY 18, 2017
Markets continued to inch upward on Monday as the NIFTY ended yet another day with modest gains of 29.60 points or 0.30%. Markets participants continued to chase momentum and the Markets maintained its specified levels on the Charts. On Tuesday, we expect a modestly positive start and we will see Market participants continuing to chase momentum. While this happens, it is high time that such chase of momentum should be accompanied with great amount of caution. The reason behind this is that the NIFTY stands overbought on both Daily and Weekly Charts and this warrants our attention.

Tuesday will see the levels of 9930 and 9975 acting as immediate resistance levels. Supports will come in lower at 9860 and 9820 zones.

The Relative Strength Index – RSI on the Daily Chart is 76.8977. This is bullish as RSI has market a fresh 14-period high but at the same time, we cannot ignore the fact that it trades overbought. The Daily MACD too stays bullish while trading above its signal line.

Pattern analysis shows the Markets continuing with its uptrend after moving past the rising trend line drawn from 9200 zones. In event of any consolidation, this trend line is expected to act as support.

All and all, frenzied chase of momentum is likely to continue to keep Markets buoyant; we need to exercise extreme levels of caution while approaching the Markets. Given the overbought nature of the Markets from every angle, some sharp corrective move or a chance of the Markets getting into consolidation mode cannot be ruled out. Every up move will make the Markets vulnerable to sharp corrective bouts. A cautious approach with great 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 

Monday, July 17, 2017

MARKET OUTLOOK FOR MONDAY, JULY 17, 2017

MARKET OUTLOOK FOR MONDAY, JULY 17, 2017
Markets saw a negligible decline on Friday’s session after it pulled back from the low point of the day to end the session with minor losses of 5.35 points or 0.05%. Though the Markets had a buoyant week and has been scaling fresh highs every other day, it is time for the momentum chasers to remain very cautious not to get caught off-guard as the Markets have made itself vulnerable to profit taking bouts from higher levels. A flat opening is expected on Monday and overbought nature of the Market demand caution from momentum chasers.

The levels of 9915 and 9940 will act as immediate resistance levels for the markets. Supports come in much lower at 9820 and 9770 zones.

The Relative Strength Index – RSI on the Daily Chart is 75.3711 and it remains neutral showing no divergences against the price. The Daily MACD stays bullish while trading above its signal line. No significant formations are observed on Candles.

Pattern analysis clearly shows the NIFTY trading once again above the rising trend line drawn from 9200-levels. Just as it was the case before, in event of any correction, this trend line is likely to act as support.

Overall, while not disputing the intact up trend in the Markets, the lead indicators remain overstretched and it is long overdue that the Markets take a breather. It would be healthy for the Markets if it takes a breather and consolidates. We recommend approaching Markets with caution and also recommend having modest exposures in the Markets while protecting positions at higher levels vigilantly.

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 

Sunday, July 16, 2017

WEEKLY MARKET OUTLOOK FOR JULY 17 THRU JULY 21, 2017

WEEKLY MARKET OUTLOOK FOR JULY 17 THRU JULY 21, 2017
Yet another peak was scaled by NIFTY on Friday and it ended the Week on a very buoyant note. The benchmark ended the week with net gains of 220.55 points on week on week basis. The Markets remain overbought and therefore warrants high degree of alert at higher levels. The liquidity is likely to continue to chase the momentum but in the same breadth, we have all the chances of positive consolidation happening in the Markets and any unabated rise will make the Markets prone to equally sharp profit taking bouts.

The coming week will see the levels of 9930 and 10150 as likely resistance levels for the Markets. Supports come in much lower at 9820 and 9760 zones.

The Relative Strength Index – RSI on the Weekly Chart is 76.5246. While NIFTY has posted a fresh 14-period high, the RSI has not done so and this has resulted into Bearish Divergence. The Weekly MACD stays bullish while trading above its signal line. No significant formations are observed on Candles.

The pattern analysis indicates the buoyancy dominating the Markets. The NIFTY remains into upward rising channel and is all likely to keep the original trend intact while having some chances to consolidate.

All and all, despite overall buoyancy remaining intact in the Markets, we cannot completely rule out the possibilities of consolidation in the Markets. Consolidation, if any, will remain in a capped range with limited downsides. We reiterate that with the primary trend remaining intact, shorts should be avoided. Cash should be preserved while adopting high degree of caution at higher levels.

A study of Relative Rotation Graphs – RRG very clearly show that REALTY Index has predominantly weakened and this week as well, it will continue to lose momentum on relative terms. The coming week will see action in FMCG and IT which are likely to relatively out-perform the Markets. PHARMA too is likely to continue to sharply improve its relative out-performance against NIFTY. Relative under-performance is likely to be seen in broader indices like CNX100, CNX200 and CNX500  and NIFTY Junior stocks. MEDIA and INFRA stocks may to under-perform. Some pockets of out-performance may be seen from Private banks and Services stocks.

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