Friday, August 4, 2017

MARKET OUTLOOK FOR FRIDAY, AUG 04, 2017

MARKET OUTLOOK FOR FRIDAY, AUG 04, 2017
In our previous note, we had mentioned that technical factors will continue to weigh heavy on the Markets. The overbought Markets continued to see consolidation today and saw a modest decline of 67.85 points or 0.67% on Thursday. Two things have come to light in a very dominant manner. One, the zones of 10114-10140 remain very critical levels to watch out for, and Second; we are seeing huge amount of short positions being added which is likely to keep overall downsides limited.
The levels of 10090 and 10140 will act as immediate resistance levels for the Markets. Supports come in at 9970 and 992
5 levels.
The Relative Strength Index – RSI on the Daily Chart is 63.5319 and it has just crossed from a topping formation which is bullish. The RSI has marked a fresh 14-period low which is bearish. Further, with the RSI setting a fresh 14-period low and NIFTY not doing so has resulted into Bearish Divergence as well. The Daily MACD still remains bullish while trading above it signal line but is moving sharply towards reporting a positive crossover.
The pattern analysis suggests that the Markets are likely to continue to retrace some more from a sharp rising wedge formation on the Close Charts. The immediate pattern support that it can look out for is the short term 20-DMA.
Overall, the lead indicators very clearly suggest that some temporary weakness is likely to continue to persist for some more time. At the same time, the continued increase in the Open Interest also point towards addition of shorts in the system. The best method to approach such Markets would be strictly avoiding any significant short positions. It is best advised to sit-through any corrective moves and utilize downsides in making select 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

Thursday, August 3, 2017

MARKET OUTLOOK FOR THURSDAY, AUG 03, 2017

MARKET OUTLOOK FOR THURSDAY, AUG 03, 2017
The Indian Equity Markets ended the day with a modest loss of 33.15 points or 0.33% as the Repo Rate cut of 25 bps failed to enthuse the Markets. There was nothing wrong with the 25 bps rate cut as it was what was widely expected by the participants. The reason of the Markets not performing was very much technical as the technical factor weighed heavy on the Markets. In the coming days as well, we will continue to see the technical weighing heavy and as of today, the levels of 10114 will continue to act as a temporary top for the Markets until it is breached significantly.

The levels of 10114 and 10160 will act as immediate resistance levels for the Markets. 
Supports come in at 10010 and 9960 zones.

The Relative Strength Index – RSI on the Daily Chart is 72.7421. It remains neutral but it also remains in overbought territory. The Daily MACD stays bullish while trading above its signal line. However, it slope suggest that it is moving towards negative crossover if consolidation persist. On the Candles, an Engulfing Bearish Pattern has occurred. It is significant and important as it has occurred during an uptrend and is all likely to temporarily halt the up move and send Markets into either correction or range bound consolidation.

The pattern analysis suggests that the Markets have retraced a bit from a sharp rising wedge formation. However, it trades comfortable above the pattern support of the rising trend line drawn from 9200 levels.

Another highlight of the day was a sharp appreciation in Rupee ahead of the RBI Policy Review. We also feel that this kept IT stocks under some pressure. However, in event of any corrective more, the downsides will remain limited as with the decline on Wednesday has come with a sharp increase in Open Interest which suggests high creation of fresh short positions. All this indicate towards imminent corrective action, less in form of downsides but more in form of volatile range bound movements.

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, August 2, 2017

MARKET OUTLOOK FOR WEDNESDAY, AUG 02, 2017

MARKET OUTLOOK FOR WEDNESDAY, AUG 02, 2017
The Markets headed nowhere for the entire session on Tuesday and continued to resist to its previous high of 10114. It was the sharp up move in the last 30-minutes of the trade that saw the benchmark NIFTY50 testing new highs once again. The NIFTY ended with net gains of 37.55 points or 0.37%. Though we expect a quiet opening once tomorrow, some upticks still cannot be ruled out. However, two major points are there that warrants our attention. First, the NIFTY has been rising with a declining market breadth and second; the up moves have come with rising VIX which has risen over 8% in previous two sessions.

Wednesday will see the levels of 10150 and 10210 playing out as immediate resistance levels for the Markets. The supports come in lower at 10025 and 9960 zones.

The Relative Strength Index – RSI on the Daily Chart is 77.8631 and it has reached its highest value in last 14-days which is bullish. The Daily MACD stays bullish while trading above its signal line. On the Candles, no significant formations were observed.

Pattern analysis shows the NIFTY continuing to remain in a sharp rising wedge formation. Normally a sharp and volatile move occurs in the opposite direction of the primary trend. In this event, the rising trend line drawn from 9200 levels is expected to act a support over coming days.

Overall, Markets are also expected to show volatile reaction to the Credit Policy Review coming up tomorrow. Rate decrease of 25bps is expected but Markets will just need a reason to react in a volatile manner. Also, the pattern analysis read along with F&O data suggest that some amount of corrective move is long overdue. Even in case of continuing upticks, extremely high degree of 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 

Tuesday, August 1, 2017

MARKET OUTLOOK FOR TUESDAY, AUG 01, 2017

MARKET OUTLOOK FOR TUESDAY, AUG 01, 2017
As mentioned in our previous note, the NIFTY continued it’s up move and closed at a fresh lifetime highs while it piled up gains of 62.60 points or 0.63%. We once again expect a modestly positive start on Tuesday and we will see momentum sustaining at least in the initial trade. We cannot rule out the possibility of the Markets continuing to attempt to scale fresh highs but still the levels of previous high of 10114 continue to remain intact as an immediate top for the Markets. More the Market approaches these levels, more volatile it is likely to get.

Tuesday will see the levels of 10114 and 10150 playing out as resistance levels for the day. Supports will come in at 10000 and 9965 levels.

The Relative Strength Index – RSI on the Daily Chart is 76.0928. A clear Bearish Divergence against the price appears as the RSI has not marked a fresh 14-period high like NIFTY. The Daily MACD remains bullish while trading above its signal line.  No significant formations were observed on Candles.

The pattern analysis show a sharp rising wedge formed on the Daily Line Charts. This implies that there can always be a corrective action and the Markets will have support of the rising trend line drawn from 9200 levels if it all if it sees any such corrective moves.

Overall, there is no option for the Market participants to continue to chase the momentum. However, doing so without any precautions might prove injurious as the Markets remain exposed to sharp corrective bouts at any time going ahead. We strongly reiterate to keep positions and keep very high degree of caution at higher levels. A corrective action over coming days cannot be ruled out despite the broader trend 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 

Monday, July 31, 2017

MARKET OUTLOOK FOR MONDAY, JULY 31, 2017

MARKET OUTLOOK FOR MONDAY, JULY 31, 2017
The Markets on Friday remained under significant corrective pressure for most part of the day but the last hour and a half saw a sharp rebound with the benchmark NIFTY50 ended the day nearly flat losing just 6.05 points or 0.06%. Monday is likely to see a modest start to the Markets. The indicators suggest a conflicting reading. There are chances that the Markets may continue to attempt some up move but at the same time, it has exposed itself even more to the vulnerability of a sharp profit taking bouts. Traders will find it even harder to chase momentum at higher levels.

The levels of 10100 and 10160 are likely to work out as immediate resistance levels for the Markets. Supports will come in lower at 9960 and 9875 zones.

The Relative Strength Index—RSI on the Daily Chart is 72.7151 and remain neutral showing no divergences against the price. The Daily MACD stays bullish while trading above its signal line. On Candles, a hanging man occurred. Though this is not a classical hanging man pattern, but its occurring during an up move is likely to make life difficult for NIFTY at higher levels.

Overall, it is beyond doubt that the overall long term trend remains intact. Short term outlook also looks buoyant. However, we need to focus on the fact that Daily and Weekly Charts remain much overbought and the F&O data suggest that volatility is likely to remain ingrained in the Markets for coming some time. Though short term trades may continue to chase the momentum, it also makes necessary for short term market participants to remain extremely vigilant at higher levels by continuing to place protective stops while chasing momentum.

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