Gemstone Equity Research & Advisory Services

Wednesday, February 29, 2012

Daily Market Trend Guide -- Wednesday, February 29, 2012

MARKET TREND FOR TODAY February 29, 2012

The Markets yesterday saw a sharp pullback, though it traded volatile and capped near the 5400 levels. The Markets opened positive, remaining in rising trajectory in the morning traded, moved sideward and range bound in the rest of the session as it gave its intraday high of 5391.10. The Markets finally ended the day at 5375.50, posting a decent gain of 94.30 points or 1.79%. In the process, it has formed a lower top and higher bottom on the Daily High Low charts.

Today it would be critical session for the Markets as it opening vis-à-vis certain levels and its intraday trajectory would decide the trend for today as well as for coming sessions.

The Markets are expected to open positive and likely to trade positive at least in the initial trade. The levels of 5400,(the blue line that is seen on the Charts) is the support that it broke while coming down is likely to act as resistance and the further resistance would come in at 5425 levels. Thus, the behaviour of the Markets as against the levels of 5400-5425 would be very critically important to decide the trend for the Markets in the coming days. Therefore, the opening of the markets as against these levels and its intraday trajectory would be critically important today.

The RSI—Relative Strength Index on the Daily Charts is 54.3939 and is neutral as it shows no negative divergence. The Daly MACD is bearish as it trades below its signal line.

Having said this, as mentioned above, the behaviour of the Markets as against the mentioned levels of 5400-5425 would be critically important to decide the trend for today and for coming days. Further to this, Markets are also likely to react to the ECB liquidity developments and also to the Quarterly GDP numbers to be announced. So, it is important to note that apart from the technicals, there are more external news flows that the Market is expected to react to.

So, in divergent circumstances, it is advised to remain light on positions until the clear directional track is achieved. No aggressive positions should be taken on either side. The purchases should be very selective and profits too should be protected at higher levels. Stock specific activities may continue to be seen. Since much would depend upon the intraday trajectory that the Markets forms post expected positive opening, volatility cannot be ruled out. We continue to advice to maintain a cautious outlook for today.

Milan Vaishnav,

Consulting Technical Analyst,

www.MyMoneyPlant.co.in

+91-98250-16331

milanvaishnav@mymoneyplant.co.in

milanvaishnav@yahoo.com

Tuesday, February 28, 2012

Daily Market Trend Guide -- Tuesday, February 28, 2012

MARKET TREND FOR TODAY February 28, 2012

The Markets went deeper into correction yesterday, quite on expected lines as it ended the day with fourth day of loss. The opened on a moderately lower note and transformed itself into falling channel and downward trajectory and remained so for the entire session. The Markets kept making new intraday lows as it went on to give the intraday low of 5268.15. It ended the day near the low point of the day at 5281.20, posting a deep cut of 148.10 points or 2.73%. With this, the Markets have lost 325.95 points in last four sessions and has formed a sharply lower top and lower bottom on the Daily High Low Charts.

We draw your attention to last couple of editions of Daily Market Trend Guide wherein we have been maintaining that given the unabated rise of the Markets in “overbought” zone, the correction too, would be similarly sharp, and that is what precisely it has been.

For today, we can expect the Markets to open on a moderately positive note and look for direction. After losing 325 odd points in last four session, we might see some nominal rise/pullback in the Markets today, but the support which it broke while coming down could act as resistance. For today, the levels of 5325 and 5390 can act as resistance and the levels of 5245 and 5205 may act as immediate supports.

All lead indicators continue to point towards continuing weakness baring a pullback of a day or so. The RSI—Relative Strength Index on the Daily Charts is 48.2630 and it has reached its lowest value in last 14-days, which is bearish. It, however, does not show any negative divergence. The Daily MACD continues to remain Bearish as it trades below its signal line.

All and all, we have seen a 33% retracement on Close levels and thus, we may see some sort of pullback. However, as evident from the Charts, the levels of 5400 would now act as immediate resistance for the Markets as it is the support it broke while coming down. So, today, we may see some pullback, there are all chances that volatility too may be seen and despite some intermittent pullbacks, correction in the Markets may continue. Overall, it is advised to remain highly stock specific in making purchases and at the same time, vigilantly protect profits at higher levels. Overall, cautious outlook is maintained for today.