Gemstone Equity Research & Advisory Services

Friday, March 2, 2012

Daily Market Trend Guide -- Friday, March 02, 2012

MARKET TREND FOR TODAY March 2, 2012

The Markets continued to correct yesterday as it remained negative throughout the session and ended the day with losses. The Markets opened on a negative note and traded with capped losses of around 1% for the most part of the session. In the second half, the Markets saw a deeper cut as it went on to give its intraday low of 5297.50. It however recovered a bit from there to finally end the day at 5339.75, still posting a loss of 45.45 points or 0.84%. In the process, it has formed a sharply lower top and lower bottom on the Daily High Low charts.

We refer our Daily Market Trend Guide dated Wednesday, February 29^th, wherein we had mentioned the levels of 5400-5420 zone acting as still resistance near the resistance line drawn on the Charts. Those levels have so far has continued to act as resistance and has become a immediate top for the Markets.

For today, expect the Markets to open stable and modestly positive and trade with gains at least in the initial trade. However, it is all likely that these gains remain capped on the upside and the Markets continue to remain in the corrective mode. The levels of 5400-5420 continues to remain stiff immediate resistance. The supports for the Markets come in at 5295 and 5265 levels.

There are no indicators of whatsoever nature that can trigger runaway rise in the Markets. The RSI—Relative Strength Index on the daily Charts is 51.6105 and it shows no negative divergence or failure swings and is therefore neutral. The Daily MACD continues to remain Bearish as it trades below its signal line.

Having said this, it is important to note two other factors that go against any sustainable rise happening in the Markets. First, the crude oil. It has been trading near its yearly highs with Brent seeing high of $130. This is certainly not a positive sign. Secondly, and more technically important, is the “Premium” in the NIFTY Futures. The NIFTY futures have been trading at a premium of over 1% (average of 57 points) to the spot since last almost 15-20 days. This is an indication of a massive built up of longs and with relatively very less retail participation in January and February, any negative news flow can induce a very sharp fall in the Markets.

Having said this, again, we continue to reiterate our cautious stand in the Markets. Longs should be kept very selective and profits very vigilantly protected at higher levels. Some positive trade today many not be ruled out but the Markets continues to lack any major triggers on the upside. It is, therefore, advised to continue to approach Markets with a cautious outlook.

Milan Vaishnav,

Consulting Technical Analyst,

www.MyMoneyPlant.co.in

http://milan-vaishnav.blogspot.com

+91-98250-16331

milanvaishnav@mymoneyplant.co.in

milanvaishnav@yahoo.com

Thursday, March 1, 2012

Daily Market Trend Guide -- Thursday, March 01, 2012

MARKET TREND FOR TODAY March 1, 2012

The Markets yesterday traded perfectly as analysed as it opened higher but failed to sustain its opening gains and pared its gains entirely and ended the day with nominal gains. The Markets opened on positive note and gave its intraday high of 5458.80 in the early minutes of the trade. The Markets traded in a capped range thereafter for a brief time, but then transformed itself into falling trajectory and it not only pared all of its gains but went on to give its intraday low of 5352.25 and ended the day at 5385.20, posting a nominal gain of 9.70 points or 0.18%. In the process, it has formed a higher top and higher bottom on the Daily High Low Charts.

We draw kind attention to our yesterday’s edition of Daily Market Trend Guide wherein, we had mentioned that the levels of 5400-5420 range would be critical resistance to the Markets due to reasons mentioned therein. The Markets opened above those levels yesterday, but did not sustain its opening gains, dropped below and closed below these levels. Thus, this zone, i.e. the levels of 5400-5425 continues to remain immediate resistance for the Markets.

For today, expect the Markets to open on a negative note and look for directions. The intraday trajectory would be crucial but it is expected that the Markets may continue to drift lower. The GDP numbers announced yesterday failed to bring any cheer as it were its lowest in last three years. The levels of 5325 and 5270 are immediate supports on the Charts.

The RSI—Relative Strength Index on the Daily Chart is 54.9848 and it shows no negative divergence or failure swings and is neutral. The Daily MACD is bearish as it trades below its signal line.

All and all, overall pattern analysis and the lead indicators point towards continuation of the corrective trend in the Market. There are no triggers, either on the news flow side or on the technical side which can trigger any fresh up move. Even if it does, the levels of 5400-5425 shall continue to act as immediate resistance for the Markets and any sustainable up move shall occur only after the Markets moves past and sustains above these levels. However, intraday volatility cannot be ruled out. Until this happens, we may either continue to correct or consolidate. Stock specific activities may continued to be seen and selective purchases may be made. Overall, cautious outlook is continued to be advised for today.