Gemstone Equity Research & Advisory Services

Wednesday, December 3, 2014

Daily Market Trend Guide -- Thursday, December 04, 2014

MARKET REPORT December 04, 2014

The Markets continued to see range bound consolidation as it ended the day with minor gains after moving in either direction. The Markets saw a flat opening and it traded in a very narrow and capped range in the morning session. After trading in sideways trajectory in the morning, the Markets saw some up move and saw itself touching the day’s high of 8546.95 in the afternoon trade. The Markets saw some amount of volatility creeping in once again as the Markets pared all of its recovery and traded flat. It saw some up move again in the late afternoon trade but did not see any runaway rise as well. Markets saw itself continuing to trade in a sideways trajectory in a much capped range and it finally ended the day at 8537.65, posting minor gains of 12.95 points or 0.15% while forming a slightly lower top and lower bottom on the Daily Bar Charts.

MARKET TREND FOR THURSDAY, DECEMBER 04, 2014

The Markets are not completely out of the woods as yet and they continue to trade below the pattern resistance levels on the Daily Charts. We are expected to see modestly negative opening once again and there are technical chances of the Markets seeing some weakness for the immediate short term. In case of up moves, the levels of 8550-8575 zone would continue to pose resistance to the Markets.

The levels of 8550 and 8575 would act as immediate resistance for the Markets. Levels of 8430 and 8375 would continue to act as immediate supports.

The RSI—Relative Strength Index on the Daily Chart is 66.6763 and it remains neutral as it shows no bullish or bearish divergence or any failure swing. The Daily MACD is bearish as it now trades below its signal line.

On the derivative front, NIFTY December futures have shed further 8.78 lakh shares or 4.11% in open interest. This continue to show that there has been consistent unwinding of long positions in the Markets.

Taking a cue from pattern analysis, the Markets continue to trade below its pattern resistance zone of 8550-8575 levels. So long as the Markets trade below these levels there are clear chances of it remaining weak. For a fresh up move to occur, the Markets will have to move past these levels with conviction and volumes. Until this happen, we continue to live with possibility of some short term correction.

Overall, speaking purely on technical ground, the Markets are prone to some short term correction. Pattern analysis show clear possibility of this and the F&O data second this reading. Given this technical condition of the Markets, it is strongly recommended to refrain from aggressive purchases. While remaining exposed to only select defensive stocks, liquidity should be maintained. Tight vigil over existing profits along with cautious outlook 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

Tuesday, December 2, 2014

Daily Market Trend Guide -- Wednesday, December 03, 2014

MARKET REPORT December 02, 2014

The Markets had a capped but volatile session as it reacted to the RBI Credit Policy which was more or less an non-event much on expected lines. The Markets opened on a modestly negative note and traded in a capped range in the morning trade. It saw a sharp decline while reacting to the RBI Credit Policy which kept the rates unchanged. Soon after forming a day’s low of 8504.65, it saw equally sharp recovery. It recovered all of its gains and the Markets also traded in positive territory for a very brief period while it formed its day’s high of 8560.20. However, the Markets did not sustain this recovery and slipped again. It spent rest of the session in a capped but falling trajectory and finally ended the day at 8524.70, posting a net loss of 31.20 points or 0.36% while forming a lower top and lower bottom on the Daily Bar Charts.

MARKET TREND FOR WEDNESDAY, DECEMBER 03, 2014

Markets will have a critical session on Wednesday. Expect the Markets to once again open on a modestly negative note and continue with its corrective activities. In our previous edition, we had mentioned that any dip below 8540 levels would induce some weakness. Since the Markets have closed below this levels, it will see some more weakness if it continues to trade below this level. If the Markets move past this level again, it would put itself once again in consolidation stage.

The levels of 8540-60 zone and 8635 would act as immediate resistance for the Markets. The supports come in at 8430 and 8375 would act as immediate supports.

The RSI—Relative Strength Index on the Daily Chart is 65.8757 and it has reached its lowest value in last 14-days which is bearish. The RSI has formed a fresh 14-period low whereas NIFTY has not yet and this is Bearish Divergence. The Daily MACD has reported a negative crossover and it is now bearish as it trades below its signal line.

On the derivative front, the NIFTY December futures have shed over 5.50 lakh shares or 2.51% in Open Interest. This clearly signifies that there has been shedding / unwinding of positions at higher levels from the Markets.

Returning to pattern analysis, the Markets has once again fallen below the rising trend line of the Broadening Formation. In other words, the breakout that the Markets have attempted has failed and it is once again trading below the rising trend line. In our couple of previous editions, we have also mentioned that Broadening Formations are least useful formation in establishing clear breakouts in the Markets as it has a upward rising trend line which keeps taking the breakout price higher every day. Until the Markets move past the levels of 8560, we would continue to see temporary weakness in the trade.

Overall, we will continue to see corrective activities in the Markets in the immediate short term. In event of any up moves we would also see some volatility creeping in which can result into intermittent profit taking bouts. It is continued to be advised to refrain from blanket purchases and keep overall exposure in the Markets curtailed. While going long with very selective purchases, overall, liquidity with cautious approach is advised for the day.