Gemstone Equity Research & Advisory Services

Monday, February 11, 2013

Daily Market Trend Guide -- Monday, February 11, 2013

MARKET TREND FOR TODAY February 11, 2013

Friday’s session remained very weak and disappointing for the Markets as it managed to hang on near its lower end of the trading range which was it support for past couple of weeks but in the second half saw a sharp cut from those levels to end the day with losses, yet again. The Markets opened on a positive note and gave its intraday high of 5953.70 in the early minutes of the trade. The Markets traded with capped gains in the morning trade but as it has been doing in last couple of session, transformed itself into falling trajectory and erased all of its gains to trade in the negative. The Markets saw some further pressure building up as it saw a sharp cut towards the end of the session as it went on to give the day’s low of 5883.65. It recovered a bit from those levels but still ended the day at 5903.50, posting a net loss of 35.30 points or 0.59%, forming a sharply lower top and lower bottom on the Daily High Low Charts.

Today’s Markets are likely to trade on similar lines. The Markets are likely to see a totally flat opening and look for directions and the intraday trajectory would be crucially important to decide the trend for today. The Markets have breached the levels of 5950 and therefore, this level is likely to act as resistance for today.

For today, the levels of 5950 and 5995 shall act as resistance on the upside. The supports come in much loser at 5825.

So far as lead indicators for the Markets goes, the RSI—Relative Strength Index on the Daily Chart is 37.6473 and it has reached the lowest value in last 14-days which is bearish. However, it does not show any bearish / bullish divergence. The Daily MACD continues to trade below its signal line. On the Weekly Charts, the RSI is 58.5188 and is neutral as it shows no failure swing or any bullish or bearish divergence. The Weekly MACD has reported a bearish crossover as it now trades below its signal line.

On the derivate front, NIFTY Futures have continued to add short positions. The NIFTY February futures have added over 1.67 lakh shares or 1.31% in Open Interest which is a little positive sign.

All and all, the Markets are likely to continue to mildly correct until it moves past the levels of 5850. So long as Markets do not move past this level, this will continue to act as resistance with the support coming in much lower at 5815 in form of its 100-DMA. It would be very critically important for the Markets to move past the levels of 5850 in order to avoid continuing weakness. Until this happens it is advised to remain light and very selective in the Markets. Cautious outlook 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

Friday, February 8, 2013

Daily Market Trend Guide -- Friday, February 08, 2013

MARKET TREND FOR TODAY February 08, 2013

Disappointing session yet again for the Markets yesterday as it continued to moderately correct and consolidate within the broad trading range, though on expected lines to end the day with moderate losses. The markets opened on a modestly negative note but the morning trade saw some positive t rend as the Markets moved into the green. In the late morning trade, it perked up further to give the day’s high of 5978.50. However, after that, the Markets again transformed themselves into falling trajectory and gradually pared all of its gains to dip into the negative. It made a feeble attempt to recover but again pared that attempt too as it gave day’s low of 5927.60. It finally ended the day at 5938.80, posting a moderate loss of 20.40 points or 0.34% while forming a lower top and lower bottom on the Daily High Low Charts.

Today would be an important session for the Markets. The Markets have been precariously hanging on the pattern supports of 5950-5940 levels which is the lower end of the broad trading range. The Markets 50-DMA also stands at 5957 and the Markets have ended a notch below it. Today, a flat opening is expected in the Markets but it would be very critically important to see if the Markets maintain the levels above 5940 to avoid any further weakness.

For today, the levels 5940-5925 shall act as important supports. If this supports are breached, then another support would come in at 5880 levels.

So far as lead indicators goes, the RSI—Relative Strength Index on the Daily Chart is 41.8812 and it has reached its lowest value in last 14-days which is bearish. Though it does not show any negative divergence. The Daily MACD continues to trade below its signal line.

On the derivative front, NIFTY has shed 75,650 shares or nominal 0.59% in Open Interest which shows mild offloading of long positions. The NIFTY PCR stands at 0.97 as against 0.95.

Having said this, there is something important to note here. The Markets have been mildly correcting over last couple of days but it has not been breaking down as such. The main reason for this is the one of the major external event, i.e. Union Budget which comes up later this month. Normally markets rally before the budget but this time, they might not rally, but they are not breaking down either.

This is one of the major reason that we are seeing some shorts being created but no major selling happening and this is keeping the Markets directionless. Normally there is a possibility that we may see a rally prior to the budget, which takes it to around its resistance levels again and then the Markets takes a serious directional call post the Budget.

All and all, there are bright chances that we may continue to see the Markets consolidating again. Even if it momentarily breaches the supports, the weakness too should not remain but longer and we might see improvement from lower levels. Even at this stage, shorts should b e strictly avoided. Cautious outlook with very selective approach is advised for today.