Gemstone Equity Research & Advisory Services

Monday, January 6, 2014

Daily Market Trend Guide -- Monday, January 06, 2014

MARKET REPORT January 06, 2014

The Markets survived a scary session on Friday as it broke below its 50-DMA after opening on a negative note but finally recovered from its lows to end the day with negligible losses. The Markets opened on a modestly negative note as expected and after trading with capped losses in the morning trade, slipped further down to form a day’s low of 6171.25. However, the second half of the trading session saw the Markets recovering from its day’s lows. It recovered major part of its gains until the end of the session. It finally managed to end the day at 6211.15 recovering over 50-odd points and posting a negligible loss of 10 points or 0.16% while forming a lower top and lower bottom on the Daily High Low Charts.

MARKET TREND FOR TODAY

With the 50-DMA being 6193 today, today’s analysis again remains more or less on similar lines like Friday. We are expected to see a flat to mildly subdued opening today and the Markets will once again trade near its 50-DMA. Like Friday, it would be of critical importance for the Markets to maintain levels above of 50-DMA and maintain closing levels above that to avoid any weakness.

Today, the levels of 6250 and 6285 are immediate resistance on the Daily Charts. The support exist at 6193 and 6150 levels on the downside.

The RSI—Relative Strength Index on the Daily Chart is 48.5232 and it is neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD remains bearish as it trades below its signal line. On the Weekly Charts, RSI is 56.2077 and it is neutral with no divergences of failure swings. The Weekly MACD continues to remain bullish as it trades above its signal line.

On the Derivative front, the NIFTY January futures have shed 17.52 lakh shares or 8.82% in Open Interest. This shows that the recovery that we saw on Friday from lower levels was more on account of short covering rather than any fresh buying. It would be important to see if this no translates into fresh buying or not.

Give the pattern analysis and the F&O Data, the Markets will not show any significant weakness creeping in so long as it manages to trade above the levels of 50-DMA. The Markets have successfully kept its head above 50-DMA at Close levels on Friday and it is important it continues to do so.

All and all, the Markets may open mildly weak, but there will be no structural breach on the Charts so long as it is trading above its 50-DMA and its filters. Any weakness will keep the Markets in a capped range. Some amount of volatility may also be seen. It is still advised to continue to refrain from shorts as some sectoral out performance would continue. While remaining light on positions, cautiously positive 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, January 3, 2014

Daily Market Trend Guide -- Friday, January 03, 2014

MARKET REPORT January 03, 2014

After remaining buoyant until late afternoon trade, the Markets suddenly saw a wave of basket selling, primarily marking the activities of FII amid low volumes and it caused the Markets to end the day with significant losses from its intraday highs. The Markets opened on a positive note remained buoyant until afternoon trade while forming the intraday high of 6358.30. The Markets resisted around the 6345 levels on expected lines but in the last hour and half of trade, the Markets saw a huge wave of basket selling by few FIIs. The low volumes aided the fall and the Markets lost over 140-odd points from its day’s high. It went on to give the day’s low of 6211 and finally ended the day at 6221.15 posting a net loss of 80.50 points or 1.28% while forming a higher top and sharply lower bottom on the Daily High Low Charts.

MARKET TREND FOR TODAY

Today, we would see some weakness persisting in the Markets in the initial trade. The levels of 50-DMA would now come again in the picture. Expect the Markets to open on a lower note and flirt with its 50-DMA. In case of Markets opening below the 50-DMA levels, it would be extremely critical for the Markets to trade above the 50-DMA levels and maintain that as support at Close in order to avoid any structural weakness. The intraday trajectory would be critically important.

The levels of 6260 and 6310 are immediate resistance on the Charts. The supports exist at 6190 and 6155 levels.

The RSI—Relative Strength Index on the Daily Chart is 49.4233 and it still continues to remain neutral as it shows no bullish or bearish divergences or failure swing. The Daily MACD has reported a negative crossover after yesterday’s decline and it now trades below its signal line.

On the derivative front, NIFTY January futures have shed over 4.95 lakh shares or 2.50% Open Interest. This shows that there has been offloading of positions but if we try and look at the brighter side, then the reduction in OI interest is not as massive as the fall that it accompanied with. This may lead us to believe that there are equal number of shorts that have been created which has tried to offset the reduction in OI to some extent.

All and all, the Markets may open around its 50-DMA or bit lower than that but it would be critically important for the Markets to maintain the levels of 50-DMA as support at Close. The intraday trajectory would be extremely important. Given shorts in the Markets, we strongly advise you to refrain from shorts. However, fresh positions too should be avoided and taken extremely selectively to maintain liquidity. Overall, cautious outlook is advised for today.