Gemstone Equity Research & Advisory Services

Wednesday, January 23, 2013

Daily Market Trend Guide -- Wednesday, January 23, 2013

MARKET TREND FOR TODAY January 23, 2013

The Markets had a little disappointing session yesterday, though quite on expected lines as it opened positive but ended up with modest losses. The Markets opened on a positive note and traded in a capped range and continued to consolidate in the first half of the session as it gave its intraday high of 6101.30. The Markets continued to trade in a range after that never really showing the required strength to move past those levels. After trading sidewards for a while, the Markets pared its morning gains and slowly drifted into the red. The losses got little deep as it went on to give the day’s low of 6040.50 towards the end of the session. No major recovery was really seen towards the end and the Markets finally ended the day at 6048.50 posting a net loss of 33.80 points or 0.56% while still forming a higher top and higher bottom on the Daily High Low Charts.

Today’s analysis may remain more or less same as that of yesterday. Today, the Markets are expected t o open on a moderately positive note and look for directions. However, at the same time it is likely that they continue to consolidate and thus traded in a capped range. The intraday trajectory it forms after opening would therefore be crucial to decide the trend for the day.

For today, the levels of 6090 and 6125 shall act as supports and the levels of 5990 and 5950 shall act as immediate supports on the Daily Charts.

The lead indicators for the Markets are neutral to mildly bullish. The RSI—Relative Strength Index on the Daily Chart is 60.6395 and it is neutral as it shows no failure swings or bullish or bearish divergences today. The Daily MACD is bullish as it continues to trade above its signal line.

On the derivative front NIFTY has reported net shedding of 7.23 lakh shares in Open Interest which is a slight negative for the Markets as it suggest some long unwinding yesterday. However it remains to be seen if this changes into fresh buying today. The NIFTY PCR stands at 1.12 as against 1.17.

Given the pattern analysis of the Markets, even though the undercurrent remains buoyant, it would be a while when the Markets makes a new high and a sustainable rally is seen. If pattern analysis is done along with the reading of the technical indicators, there are clear chances that we may see the Markets continue to consolidate in a broad 70-100 point range on either side before it resumes its rally which is sustainable at higher levels.

All and all, the undercurrent remains intact but consolidation and minor profit taking from higher levels in case of positive opening cannot be ruled out. Given the above reading, it is continued to be advised to approach the Markets on highly selective basis and take fresh positions very selectively while strictly avoiding shorts. Profits too should be protected at higher levels and aggressive positions should be avoided. Overall, cautious optimism is advised for today.

Milan Vaishnav,

Consulting Technical Analyst,

www.MyMoneyPlant.co.in

http://milan-vaishnav.blogspot.com

+91-98250-16331

milanvaishnav@mymoneyplant.co.in

milanvaishnav@yahoo.com

Tuesday, January 22, 2013

Daily Market Trend Guide -- Tuesday, January 22, 2013

MARKET TREND FOR TODAY January 22, 2013

The Markets behaved very much on expected lines as it did not had a runaway rally and in fact, continued to consolidate in a range bound manner, ended the day with modest gains. The Markets opened on a positive note and spent the entire session trading into the gain with capped gains. After opening moderately positive and trading with capped gains, the Markets did pare some of its gains to give the day’s low of 6065.10. In the second half of the session, Markets perked up a bit and it went on to give the day’s high of 6094.35. It hovered around those levels in a very capped manner again and finally ended the day at 6082.32, posting a modest gain of 17.90 points or 0.30% while forming a higher top and higher bottom on the Daily High Low Charts.

Today, expect the Markets to open on a flat note and look for directions. The Markets show clear signs that it might continue to open flat but continue to trade in a capped range while consolidating bit more before it moves up further. Intraday trajectory would be extremely important however, given the pattern analysis; consolidation on moderate volumes is more likely.

The levels of 6105 and 6130 are likely to act as immediate resistance levels and the supports come much lower at 6015 and 5950.

The lead indicators of the Markets as well as the pattern analysis suggests that it would be a while before we see a “sustainable” runaway rally. There are very clear indications that we may see the Markets continue to consolidate and even very mildly correct while keeping the underlying trend intact. The RSI—Relative Strength Index on the Daily Chart is 65.9473 and though it does not show any failure swing, the NIFTY has set a new 14-day high whereas the RSI has not. This is bearish divergence. On the other hand, the MACD continues to remain bullish as it trades above its signal line.

On the derivative front, NIFTY January futures have added over 1.55 lakh shares in Open Interest this is certainly a positive sign as no unwinding is seen at these levels.

Overall, given the reading of the F&O data, there is certainly no weakness in the underlying trend. However, given the reading of the lead indicators and pattern analysis, the mild possibility of Markets consolidation and minor profit taking at higher levels too cannot be ruled out. Given this, it is best advised to continue to remain very selective while making fresh purchases and protect profits vigilantly at higher levels. Shorts should be strictly avoided as underlying current remains intact. Positive caution is advised for today.