Saturday, August 12, 2017

WEEKLY MARKET OUTLOOK FOR AUG 14 THRU AUG 18, 2017

WEEKLY MARKET OUTLOOK FOR AUG 14 THRU AUG 18, 2017
In our couple of previous Weekly notes, we had indicated about highly overbought Markets and overstretched technical indicators pointing towards imminent sharp corrective moves. The benchmark NIFTY50 remained vulnerable to volatile and sharp profit taking bouts and it happened precisely that. In this Week that has gone by. The NIFTY ended the Week losing 355.60 points or 3.53% on a weekly basis. The coming week is a truncated week with a holiday in between and we need to watch the 9700-9770 zones very closely. Any breach of this level will have us see temporary disruption in the primary uptrend.

Coming week is likely to see the levels of 9770 and 9890 acting as potential resistance levels. Downsides may extend up to 9530 levels which is the 100-DMA of the Markets which is a 
major support to look at in event of continued weakness.

The Relative Strength Index – RSI on the Weekly Chart is 60.7076 and it has just moved below the topping formation which is bearish. Weekly RSI has marked a bearish divergence by making a 14-period low while NIFTY has not. The Weekly MACD still remains bullish while trading above its signal line. A big black candle has occurred which establishes the credibility of the resistance area. It reinforces the zones of 10114-10135 as immediate top for the Markets. Further, an Engulfing Bearish candle has occurred which further Markets these levels as a top for coming weeks.

All and all, it is pretty much evident that the levels of 10114-10135 have been marked as an immediate top. If we look at the levels on the Daily Chart, if the Markets fail to trade above 9770-mark, its drifting towards 100-DMA cannot be ruled out. Even the Weekly Chart suggests that there is a room for some more corrective downsides in coming weeks. There will be technical pullbacks in between this as well. Though the primary uptrend remains intact, it certainly remains disrupted if the NIFTY trades below 9700 mark. Preserving cash while remaining extremely stock specific is what is advised for the coming week.

A study of Relative Rotation Graphs – RRG PHARMA Index faltered on both Relative Strength and Momentum but this week, may attempt to find bottom and consolidate. Select pockets of pharma stocks may see some bottom fishing. IT and METAL will continue to relatively outperform the NIFTY . We will see select out performance on relative basis from Energy sector as well. Apart from this, all broader indices, Midcaps, Small cap and other sectoral indices are not expected to see any good performance over 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 



MARKET OUTLOOK FOR FRIDAY, AUG 11, 2017

MARKET OUTLOOK FOR FRIDAY, AUG 11, 2017
Amid greatly volatile session on Thursday, the benchmark NIFTY50 continued to decline on the fourth day in a row while ended the day with net loss of 87.80 points or 0.89%. In this process of volatility, perhaps Markets have attempted to find a bottom for itself as it recovered nearly 50-odd points from the low point of the day on account of evidently heavy short covering . In all probability, the levels of 50-DMA which stand at 9772 will be extremely critical level to watch for. In larger probability, Markets will attempt and find respite from the current corrective mode.

The levels of 9860 and 9885 will act as immediate resistance levels for the Markets. The supports come in at 9770 and 9720 zones.

The Relative Strength Index – RSI on the Daily Chart is 43.0118 and it has marked a fresh 14-period low and this is bearish. However, it does not show any bullish or bearish divergence against the price. The Daily MACD stays bearish while trading below its signal line. A falling window has occurred on Candles and this usually implies continuing weakness on the Charts.

The pattern analysis show the NIFTY breaking the short term rising trend line pattern support and in event of any pullback, this line is likely to act as resistance while the Markets attempts to find base at current levels.

The important level that can act support at close level is the 50-DMA at 9772 and any breach of this level will force the Markets into intermediate bear trend. So long as Markets rule above the 50-DMA it will attempt to find base and we may see some technical pullback. As of now, the primary trend remains intact; but behavior of the Markets vis-à-vis the levels of 50-DMA needs to be closely watched. Preservation of cash is advised until we see Markets resuming its up move again.

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, August 10, 2017

MARKET OUTLOOK FOR THURSDAY, AUG 10, 2017

MARKET OUTLOOK FOR THURSDAY, AUG 10, 2017
The recovery from the low point of the day on Wednesday in the second half of the session remained short lived as the benchmark NIFTY50 slipped further end the third day in the red losing 70.50 points or 0.71%. In the process, it has added some more shorts into the system. Much on the expected lines, the Markets breached its short term 20-DMA level and have gone on to test the important pattern support of the rising trend line drawn from 9200 levels. Thursday’s opening would be crucial and it would important to see if the Markets attempts to find support around current levels and if shorts come to the rescue for a technical pullback.
The levels of 9950 and 10065 will act as important resistance levels for the Markets. Supports come in at 9880 and 9820 zones.
The Relative Strength Index – RSI on the Daily Chart is 49.8802 and it has marked a fresh 14-period low which is bearish. It does not show any divergence against the price. The daily MACD stays bearish while trading below its signal line.
While having a look at pattern analysis, NIFTY has breached its short term support of 50-DMA but has rested itself on a pattern support of a rising trend line drawn from 9200 levels.
All and all, we need to see the Markets trading above 9900 zones to avoid any further weakness from creeping in. Also, in any case, we strongly recommend staying away from creating short positions as the Markets has seen sharp buildup of short positions in the previous three sessions. At any point of time, we may see Markets showing a equally sharp pullback owing to short covering. With the chances of shorts getting trapped at lower levels, avoiding short positions and picking up quality stocks with every decline 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

MARKET OUTLOOK FOR WEDNESDAY, AUG 09, 2017

MARKET OUTLOOK FOR WEDNESDAY, AUG 09, 2017
Indian Equity Markets remained under corrective pressure on Tuesday as the benchmark NIFTY50 slipped below the 10000-mark closing at 9978.55 while losing 78.85 points or 0.78%. The Markets found a reason to correct while the watchdog SEBI put 331 companies in the “shell companies” list. Even without this development, the Markets anyway technically remained prone to corrective pressure. In coming days, while the levels of 10114-10150 remain an immediate top for the Markets, technical pullbacks cannot be ruled out as the Markets have added heavy Open Interest with the decline.
The levels of 10030 and 10110 will act as immediate resistance levels for the Markets while the supports will come in at 9970 and 9910 zones.
The Relative Strength Index – RSI on the Daily Chart stand at 56.6217. It has marked a fresh 14-period low and this is a bearish sign. Also, the RSI has set a fresh 14-period low while the NIFTY has not yet and this has resulted in Bearish Divergence. The Daily MACD stays bearish while trading below its signal line.
The NIFTY August futures have added massive 12.74 lakh shares or 5.87% in Open Interest. This is a big indication of heavy fresh shorts being initiated in the system.
Overall, as of today, the Markets have taken support at its short term 20-DMA level. Any breach below this will see Markets testing the pattern support of the rising trend line drawn from 9200 levels. However, we reiterate to strictly avoid any aggressive shorts because looking at the amount of Open Interest that the Markets pile up with each decline, it may see equally sharp and volatile  technical pullback from lower level as well. Overall, modest exposure on either side with enough preservation of liquidity 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

Tuesday, August 8, 2017

MARKET OUTLOOK FOR TUESDAY, AUG 08, 2017

MARKET OUTLOOK FOR TUESDAY, AUG 08, 2017
The Indian Equity Markets made no meaningful headway as it oscillated in a very narrow range before ending the day with minor loss of 9 points or 0.09%. On Tuesday, we can expect a quiet start to the Markets. We expect modest corrective undertone to persist and we are once again seeing shorts entering the system. In any given case, the zones of 10114-10150 have now become even more critical to watch out for as they are likely to remain immediate resistance zone for the Markets. Unless this area is breached significantly, it is unlikely that we will see any significant and meaningful up move.
The levels of 10114 and 10150 will act as immediate resistance levels for the Markets. Supports come in at 9990 and 9945 levels.
The Relative Strength Index – RSI on the Daily Chart is 65.8673 and it remains neutral showing no divergences of any kind against the price. The Daily MACD has turned bearish as it has reported a negative crossover and it now trades below its signal line. No significant formations were observed on Candles.
The pattern analysis shows that the Markets are heading nowhere after marking its immediate highs in the 10114-10150 zones. It trades well above the rising trend line pattern support and in event of any corrective move; this pattern is likely to act as support.
All and all, we do not see the Markets making any significant move and are expected to remain range bound. We expect corrective undertone to persist but with limited declines. We recommend using all up moves to protect and book profits. Shorts should be avoided and downsides should be used to make modest purchases. Continuance of 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

Monday, August 7, 2017

WEEKLY MARKET OUTLOOK FOR AUG 07 THRU AUG 11, 2017

WEEKLY MARKET OUTLOOK FOR AUG 07 THRU AUG 11, 2017
Much as was expected in our previous Weekly note, there much significant amount of volatility that the Markets witnessed in the week that has gone by. Still, the benchmark NIFTY continued to post modest gains and has ended the Week with net gains of 51.90 points or 0.52% on a Weekly basis. We still maintain and reiterate that the levels of 10114-10150 seem to be very critical levels for the NIFTY. Unless these levels are breached on the upside significantly, sustainable up moves will not be seen.

The coming week will see the levels of 10150 and 10230 acting as immediate support levels. Supports will come in at 9960 and 9850 levels.

The Relative Strength Index – RSI on the Weekly Chart stand at 79.7787 and it has marked a fresh 14-period high. However, we cannot ignore the fact that this indicator now remains in seriously overbought territory. Weekly MACD stays bullish while trading above its signal line. No significant formations were observed on Candles.

There is no dispute to the fact that the Markets are extremely buoyant and are readying itself for a fresh set of up move. However, we just cannot ignore the fact that the extremely overbought nature of the Markets will prevent it from a significant breakout from 10114-10150 levels. Any attempt will definitely be met with volatile profit taking bouts. Volatility will remain very much ingrained in the system. Except for some sector specific stock picks, broad chase of momentum will have very skewed  and unfavorable risk to reward ratio for the market participants.


A study of Relative Rotation Graphs – RRG show that corrective mood is spreading wider into the broader markets. The coming week will only see just 3 sectors relatively out-performing the Markets. PHARMA has considerably improved its performance and is likely to continue to do so. METAL and IT Stocks will also join this relative out-performance. We will see these sectors doing good even with strength in the US Dollar that is currently seen. 

The broader Markets will continue to lose momentum. REALTY, FMCG, AUTO etc, are likely to slow down and gradually lose momentum. We will see ENERGY sector showing some performance in select 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