Gemstone Equity Research & Advisory Services

Tuesday, May 28, 2013

Daily Market Trend Guide -- Tuesday, May 28, 2013

MARKET TREND FOR TODAY May 28, 2013

While defying all technical indicators and the derivative data, the Markets had a robust session and it ended the day with strong gains near its pattern resistance. The Markets opened on a flat note and momentarily dipped into the red as it gave its day’s low of 5975.55 in the very early minutes of the trade. The Markets then immediately came into the positive territory and then spent most of the session in a sideways movement and traded with capped gains. The last hour and half of the session brought in bit a surprised as the Markets gained further strength. It perked up further and went on to give the day’s high of 6099.90 towards the end of the session. It came of a bit from those levels but finally ended the day at 6083.15, posting strong gains of 99.60 points or 1.66% while forming a sharply higher top and bottom on the Daily High Low Charts.

Today, we are likely to see a flat opening in the Markets. The Markets have closed near the pattern resistance levels of 6090-6100. This is the level which it breached on its way down and therefore, it is likely that the Markets shall resist at these levels. The opening, therefore, would be crucial. If the markets manages to move past the levels of 6090-6100, it can move up further, but otherwise, it may again resist at these levels and we may the Markets consolidating again. Rollovers are likely to continue to dominate the session.

For today, the levels of 6100 and 6130 shall act as resistance. The supports come in much lower at 6020 and 5975 levels.

The lead indicators remain neutral. The RSI—Relative Strength Index on the Daily Chart is 56.7271 and it is neutral as it shows no negative divergence or failure swings. The Daily MACD continues to trade below its signal line and therefore continues to remain bearish.

On the derivative front, NIFTY May futures have shed over 21.27 lakhs shares or over 8.79% in Open Interest whereas June Futures have added over 24.71 lakhs shares or over 92.19% in Open Interest which signifies heavy rollovers taking place.

Overall, if we go with the pattern analysis, the Markets are likely to resist around 6100 levels. We might see temporary up move if the Markets move past these levels but otherwise, the chances of the Markets consolidating again are higher. However, this being the rollover week, the volatility shall remain and we will see the Markets trading on either side in the volatile manner.

All and all, the opening levels of the Markets and its behaviour vis-à-vis the levels of 6100 shall dominate the directional trend for today. The Markets are expected to find resistance around this levels. However, as mentioned above, this being expiry week, volatile movements on either side cannot be ruled out. It is advised to remain light on positions and taking aggressive positions on either side should avoided. Overall, continuance of 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

Monday, May 27, 2013

Daily Market Trend Guide -- Monday, May 27, 2013

MARKET TREND FOR TODAY May 27, 2013

The Markets headed nowhere as it consolidated in a narrow band and ended the day with moderate gains after a mildly positive opening. The Markets opened on a positive note and gave its intraday high of 6015.30 in the very early minutes of the trade. After opening around these levels the Markets did not sustain and slipped into the red and gave its day’s low of 5936.80 in the late morning trade itself. However, the late morning trade saw some recovery from its day’s lower levels as the Markets came back into the green to trade positive by afternoon. However, from afternoon, until the end of the session the Markets headed nowhere as it continued to trade in sideways in a capped band. The Markets continued to trade with capped gains until the end of the session. It finally ended the day at 5983.55, posting a nominal gain of 16.50 points or 0.28% while continuing to form a lower top and lower bottom on the Daily High Low charts.

Today, expect the Markets to open on a flat to moderately negative note and look for directions. Both, the technical indicators as well as the derivatives data show that there are no explicit triggers for the Markets to pullback. Any pullback, like that of Friday, may remain temporary and overall, the Markets are likely to continue to see corrective activities and may continue to move towards its 100-DMA.

For today, the levels of 6010 and 6035 shall act as immediate resistance for the Markets. The supports come in at 5940 and 5875 levels.

All lead indicators point towards correction continuing in the Markets. The RSI—Relative Strength Index on the Daily Chart is 49.8999 and it shows no bearish or bullish divergence or failure swing and is therefore neutral. The Daily MACD is bearish as it trades below its signal line. On the Weekly Charts, the RSI is 55.7508 and is neutral as it does not show any failure swings or any kind of divergences. The Weekly MACD trades above its signal line. On the Weekly Candles, An engulfing bearish line occurred (where a black candle's real body completely contains the previous white candle's real body). The engulfing bearish pattern is bearish during an uptrend (which appears to be the case with NIFTY). It then signifies that the momentum may be shifting from the bulls to the bears.

On the derivative front, NIFTY May futures have shed over 7.31 lakh shares or 2.93% in Open Interest. This clearly show offloading of positions again from higher levels on Friday.

Having said this, the expiry week has begun and therefore, we will also see the sessions being dominated with rollover centric activities. However, there are no explicit triggers for the Markets to reverse and therefore, it will continue to trade in a given range, of course with a weaker bias.

Given these readings, we continue to advice to remain highly selective in taking fresh positions. Aggressive positions now on either side should be avoided and while taking selective positions, profits should be vigilantly protected. If the Markets do not get any positive triggers, it is likely to test its 100-DMA at Close levels which can act as it’s immediate short term support. Overall, approaching Markets with mild degree of caution is advised for today.