Gemstone Equity Research & Advisory Services

Tuesday, September 3, 2013

Daily Market Trend Guide -- Tuesday, September 03, 2013

MARKET REPORT September 03, 2013

The Markets had a decent session yet again as it continued its up move while moving past its pattern resistance levels as it ended the day yet again with decent gains. The Markets opened on a positive note and traded with modest but capped gains in the morning session. The Markets saw some strength coming in the second half of the session as it managed to move past the pattern resistance levels mentioned in our yesterday’s edition of Daily Market Trend Guide. It went on to give the day’s high of 5564.90 in the afternoon session. The Markets managed to maintain those levels in the last hour and half as it traded sideways and in a capped range once gain. It finally ended the day at 5550.75, posting a net gain of 78.95 points or 1.44% while continuing to form a higher top and higher bottom on the Daily High Low Charts.

MARKET TREND FOR TODAY

Today as well, expect the Markets to open on a modestly positive note and look for directions. However, we once again point out that the Markets have risen over 445-odd points from the lows made on August 28^th and this is getting little jittery. There are strong chances that the Markets consolidates but maintains levels above 5500 in coming session, while keeping the overall trend certainly intact.

For today, the levels of 5564 and 5620 are immediate resistance levels on the Charts. The supports come in at 5500 levels.

The lead indicators certainly suggest the trend to remain intact in coming sessions. The RSI—Relative Strength Index on the Daily Chart is 49.3573 and it has reached its highest value in last 14-days which is bullish. Also, the RSI has made a new 14-day high but NIFTY has not and this is a Bullish Divergence. The Daily MACD continues with its positive crossover and it currently bullish as it now trades above its signal line.

On the derivative front, the NIFTY September futures have added over 7.16 lakh shares or 4.14% in Open Interest. This signifies continuation of creation of longs and the rise cannot to attributed to any kind of short covering.

Given the above reading that the Markets have moved past its pattern resistance levels of 5500-5520 yesterday, the lead indicators showing continuing bullish momentum and the Markets making a positive crossover on Daily MACD certainly suggests the continuation of up move in the immediate short term. However, along with this, we also have to bear in mind the one-way rise of over 445-odd points since lows of August 28^th and this may make the Markets see some range bound consolidation.

All and all, we can expect the up move to continue in the immediate short term. However, due to the reasons cited, we cannot rule out some minor profit taking from higher levels or some range bound consolidation taking place. However, until the Markets maintains levels above 5500, the trend would remain in tact. Very selective purchases may be made while protecting profits at higher levels.

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, September 2, 2013

Daily Market Trend Guide -- Monday, September 02, 2013

MARKET REPORT September 02, 2013

The Markets had a sea saw like session on Friday as remained very volatile throughout the session but finally ended yet another day with smart gains. The Markets opened on a negative note but slowly crawled into the positive territory. The Markets traded with decent gains in the morning trade however it saw sharp paring of gains in the early afternoon trade. The Markets pared its morning gains, traded flat and dipped further into the red to give the day’s low of 5360.20. The last hour and half of the trade showed a very smart recovery in the Markets. The Markets came off its lows, and trade back into the green. It also went on to give its day’s high of 5493.30, rising over 130—odd points from the day’s low. It finally ended the day at 5471.80, posting yet another gain of 62.75 points or 1.16% while continuing to form a higher top and higher bottom on the Daily High Low charts.

MARKET TREND FOR TODAY

The Markets have risen over 375 points from the day’s low made on August 28^th until Friday. We have also mentioned in one of our past editions of Daily Market Trend Guide that the levels of 5500-5520 shall act as immediate resistance as that is the support the Markets broke on its way down. Today, we are likely to see flat opening in the Markets and we may see the Markets consolidating again at these levels. Minor chances of profit taking cannot be ruled out.

For today, the levels of 5500-5520 shall act as immediate resistance for the Markets. The supports exist at 5440 and 5390 levels.

The lead indicators maintain a steady reading. The RSI—Relative Strength Index on the Daily Chart is 45.0281 and its shows no bullish or bearish divergence or any kind of failure swings and it is therefore neutral. The Daily MACD was now reported a positive crossover and it is now bullish as it now trades above its signal line.

On the Weekly Charts, RSI is 38.2025 and it is neutral as it shows no negative divergence or a failure swings. The Weekly MACD however, continues to trade below its signal line and is therefore bearish.

On the derivative front, NIFTY September Futures have further went on to add over 26.64 lakh shares or 18.18% in Open Interest.

Given the above reading, if we do not consider pattern resistance of 5500-5520 levels, we can safely assume that the Markets are all set and poised for a further up move. However, the levels mentioned are important pattern resistance levels and cannot be ignored. Even if all lead indicators and F&O data suggest continuation of up move, it is advised to exercise caution around these levels. Markets may continue with its up move but would at least see some minor profit taking or consolidation around these levels.

All and all, all indicators are suggesting continuation of up move, but given the rise of over 375 points from the lows of 28^th August, and the pattern resistance levels of 5500-5520 in the vicinity, it is strongly advised to exercise caution around these levels as the possibility of a minor correction or profit taking or at least some consolidation cannot be ruled out. The session may remain volatile and thus purchases maybe made very selectively while protecting profits at higher levels.