Gemstone Equity Research & Advisory Services

Monday, September 1, 2014

Daily Market Trend Guide -- Tuesday, September 02, 2014

MARKET REPORT September 02, 2014

The Markets had a stable and robust start to the new series as it expectedly opened strong on back of strong GDP Data, traded sideways only to get stronger and ended the day with decent gains. The Markets saw a nearly gap up opening and it traded sideways while maintaining those gains in the first half of the session. The Markets saw some more strength coming in the second half of the session as it strengthened further. It went on to form the day’s high of 8035 towards the end of the session though it continued to resist at the rising trend line for the most part of the day. Markets maintained those levels and finally ended the day at a fresh lifetime high at 8027.70, posting a net gain of 73.35 points or 0.92% while forming a higher top and higher bottom on the Daily Bar Charts.

MARKET TREND FOR TUESDAY, SEPTEMBER 02, 2014

Tomorrow would be a crucial day for the Markets. Technically speaking, the Markets are likely to see positive opening as it has closed near the high point of the day. With the opening trade expected to be in positive, the behaviour of the Markets vis-à-vis the levels of 8040-8050 would be very crucial as it might meed resistance to the rising trend line of the current broadening formation on the Close charts.

The levels of 8050 and 8075 might act as resistance as the Markets would then trade in uncharted territory. The supports would come in much lower at 7930 and 7875 levels.

The RSI—Relative Strength Index on the Daily Chart is 70.2587 and it has reached the highest value in last 14-days which is bullish. But it does not show any bullish or bearish divergence and it has also now entered the “overbought” territory. The Daily MACD continues to trade above its signal line.

On the derivative front, NIFTY September series have begun by adding over 3.89 lakh shares or 2.44% in Open Interest. This shows fresh positions on the long side have been added and this might aid positive trade the next session.

Returning to pattern analysis, as mentioned earlier, the Markets continue to remain in the broadening formation and this formation is read on the Close (line) charts. With today’s rise, the Markets have close near its resistance of rising trend line as evident from the Daily Charts and it has not yet achieved the breakout. If it achieves a breakout on the upside the would drift further in the “overbought” territory would be then make any such rise unhealthy.

Given this reading, there is fair amount of chance that the Markets may see positive opening and trades positive in the initial trade. However, given the overall reading on the Close charts the chances of some profit taking at higher levels just cannot be ruled out. Given this, while maintaining adequate liquidity, cautious outlook is advised.

Milan Vaishnav,

Consulting Technical Analyst,

www.MyMoneyPlant.co.in

http://milan-vaishnav.blogspot.com

+91-98250-16331

milanvaishnav@mymoneyplant.co.in

milanvaishnav@yahoo.com

Sunday, August 31, 2014

Daily Market Trend Guide -- Monday, September 01, 2014

MARKET REPORT September 01, 2014

The Markets had a lesser than expected volatile session on Thursday, on the day of expiry as it traded in a given range to end the day with minor gains. The Markets opened on a positive note and formed its intraday high of 7967.90 in the very early minutes of the trade. Thereafter, the Markets traded with modest gains in a capped range. The rest of the session saw the Markets gradually paring gains as it came of from intraday high levels. However, it did not really saw any pressure as no aggressive downside was observed. It kept gradually paring gains but continued to overall trade in a range and maintained to trade in the positive trajectory. It finally ended the day at 7954.35, posting a net gain of 18.30 points or 0.23% while forming a higher top and higher bottom on the Daily Bar Charts.

MARKET TREND FOR MONDAY, SEPTEMBER 01, 2014

Markets would wake up from a slumber of three days as Friday was a trading holiday on account of Ganesh Chaturthi. GDP numbers, that came in Friday evening are certainly on expected lines which saw the growth figures at 27 month high. This is likely to have its effect in opening tomorrow. Markets may open on a positive note and test its upper trend levels of the broadening formation and might even test 8000 mark while still remaining in the broad trading range.

The levels of 7970 and 8025 would act as immediate resistance levels. The supports come in at 7860 and 7800 levels.

The RSI—Relative Strength Index on the Daily Chart is 66.0750 and it has reached its highest value in last 14-days which is bullish. It does not show any bullish or bearish divergence as such. The Daily MACD remains bullish while trading above its signal line. On the Weekly Charts, the RSI is 70.2767 and it now trades in “overbought” territory. Also, though it does not show any failure swings, the NIFTY has posted a fresh Weekly High in last 14-periods whereas RSI has not and this is clear Bearish Divergence on the Weekly Charts. The Weekly MACD continues to trade above its signal line.

On the derivative front, the NIFTY September futures added over 50.81 lakhs shares or 46.74% on the expiry day of the August Series.

Returning to pattern analysis, it should be noted in a very clear terms that if we analyse the broadening formation on the Daily Close (line) Charts, on which it holds significance, the Markets have gap of going up to and closing bit above 8000 levels. However, it would still mean that the Markets are within the rising trend line drawn and would not imply a breakout on the upside. Further to this, if we read the lead indicators which are overbought on the weekly charts, the Markets still very much continue to remain in the process of creating a major top.

Keeping in line with the above reading, we would still like to stick to a word of great caution. Even with some positive and strong opening we might get, it is very strongly advised not to get carried away with the upside as the Markets may mark a major top at any given point. Fresh purchases should be kept limited to individual specific stocks among other defensives and profits should be protected heavily. Overall, positive caution is advised.