Gemstone Equity Research & Advisory Services

Monday, October 20, 2014

Daily Market Trend Guide -- Tuesday, October 21, 2014

MARKET REPORT October 20, 2014

Markets reacted quite in line with the positive news flow and global stability as it opened higher and ended the day with decent gains. As expected, the Markets opened on a gap up note and maintained its gains throughout the day. After opening higher, the Markets inched up further and formed its intraday high of 7905.95 in the mid session. Overall, though the Markets continued to trade in sideways trajectory in 30-odd points range, it did successfully capitalize on its gains and maintained them all throughout. The Markets saw itself coming off its high a bit while it formed intraday low of 7856.95 but continued to remain in strong trajectory. It finally ended the day at 7879.40, posting a decent gain of 99.70 points or 1.28% while forming a higher top and higher bottom on the Daily Bar Charts.

MARKET TREND FOR TUESDAY, OCTOBER 21, 2014

The Markets have created a gap as evident from the Daily Charts and have also resisted to its 50-DMA levels. Expect the Markets to open on a modestly positive note and continued with its up move. However, the levels of 50-DMA would continue to act as resistance and in event of any weakness we might see the Markets trading in a range with the levels of 7800-7820 acting as supports once again.

The levels of 7925 and 7970 would act as resistance and the levels of 7800-20 levels would now once again continue to act as supports.

The RSI—Relative Strength Index on the Daily Chart is 47.4600 and it remains neutral as it shows no bullish or bearish divergences or failure swing. The Daily MACD continues to remain bearish as it trades below its signal line. On Candles, A rising window occurred (where the top of the previous shadow is below the bottom of the current shadow). This usually implies a continuation of a bullish trend. There have been 9 rising windows in the last 50 candles--this makes the current rising window even more bullish.

On the derivative front, the NIFTY October futures have added over 5.86 lakh shares in Open Interest. This is enough indication that the Markets have not seen any short covering which would have otherwise resulted in decline of OI. This can certainly help the Markets and aid it its advance on the upside.

Referring to the pattern analysis, the Markets today opened, traded and ended the day above its resistance levels of 7800-20 levels. Now this resistance, when surpassed would act as its support once again. On the upside, the Markets might face modest resistance at it 50-DMA levels. Until this level is breached on the upside, we can expect the Markets to trade in a range with the levels of 7800-20 acting once again as support.

Overall, it is likely that the Markets consolidate before attempting a fresh up move. While the Markets do so, we would also see sector rotation taking place and the current laggards like IT might remain in bit of limelight. It would be extremely imperative to stick to quality stocks and therefore, very selective approach with positive caution is advised for the day.

Milan Vaishnav,

Consulting Technical Analyst,
Af. Member: Market Technicians Association (MTA), USA
Af. Member: Association of Technical Market Analysts, INDIA

www.MyMoneyPlant.co.in

http://milan-vaishnav.blogspot.com

+91-98250-16331

milanvaishnav@mymoneyplant.co.in

milanvaishnav@yahoo.com

Sunday, October 19, 2014

Daily Market Trend Guide -- Monday, October 20, 2014

MARKET REPORT October 17, 2014

The Markets had a relatively better session yesterday as the Markets showed recovery to end the day with modest gains with some signs of stabilization in the weak global markets. The Markets opened on a mildly positive note and contrary to the expectation, it dipped into the negative to form the day’s low of 7723.85 in the late morning trade. However, it held on to the support of 100-DMA levels, intraday, and attempted to pullback from those levels. The Markets spent rest of the session in upward rising trajectory. It recovered all of its morning losses and came back in the positive territory. It went on to gradually form highs and thereby went on to register its intraday high of 7819.20. Again, the levels of 7800-20 acted as resistance and the Markets finally settled the day at 7779.70, posting a modest gain of 31.50 points or 0.41% while forming a lower top and similar bottom on the Daily Bar Charts.

MARKET TREND FOR MONDAY, OCTOBER 20, 2014

Markets present little precarious picture on the Daily Charts. Expect the Markets to open on a modestly positive note and it is expected that the Markets would continue with its attempted recovery. Fact that it took support nearly twice on its 100-DMA, pullbacks in the global markets, outcome of Maharashtra and Haryana polls on expected lines, etc., would aid our technical attempt of pullback. On the same lines, it would be very important for the Markets to move past the 7800-20 levels in order to successfully post a pullback.

The levels of 7800-20 and 7865 would act as resistance and the supports would come in at 7742 and 7705 levels.

The RSI—Relative Strength Index on the Daily Chart is 39.8413 and it is neutral as it shows no bullish or bearish divergence or failure swings. The Daily MACD remains bearish while trading below its signal line. On the Weekly Charts, the Weekly RSI is 58.2240 and it has reached its lowest value in last 14-weeks and this is bearish. Further, the Weekly RSI has set a new 14-week low whereas NIFTY has not yet and this portrays Bearish Divergence. The Weekly MACD continues to trade below its signal line.

On the derivative front, the NIFTY has added over 12.05 lakh shares or 8.35% in Open Interest. This open interest addition is significant and we can easily interpret that the Markets have added quite significant amount of short positions and it is very much likely that in event of any downside, the levels of 100-DMA are likely to continue to act as supports an these short positions would also act out as supports.

Returning to pattern analysis, the Markets have done both – taking support at its 100-DMA levels nearly twice and also continuing to resist to 7800-20 zone, the support zone which it broke on the downside. Now these levels would continue to act as resistance and it would be very important for the Markets to move past these levels in order to pullback successfully. Failure to do so will result into higher chances of the Markets returning towards its 100-DMA.

Going forward, it is advised to continue with positive caution and approach the Markets accordingly. We might see some decline in overall volumes due to festival season this week however, volatility is certainly to stay in the Markets. Also reading the weekly charts, it is unlikely that the Markets see a runaway rise. Any pullback will see the Markets back in a trading range. While remaining low on overall exposure, positive caution is advised.