Gemstone Equity Research & Advisory Services

Monday, January 5, 2015

Daily Market Trend Guide -- Tuesday, January 06, 2015

MARKET REPORT January 06, 2015

The Markets remained in corrective mode today after Friday’s buoyant move as it ended the day with minor losses after a volatile session. Disregarding global cues, the Markets saw a positive and better than expected opening. It put on some more strength as it formed the day’s high of 8445.60 in the late morning trade. However, after this point, the Markets changed its trajectory. It pared some of its gains initially but then converted itself into a falling trajectory. It kept losing ground gradually as pared its morning gains to dip into negative. It went on to form the day’s low of 8363.90, coming off nearly 80-odd points from the high point of the day. Some minor recovery was seen in the final minutes of the trade, the Markets finally ended the day at 8378.40, posting a net loss of 17.05 points or 0.20% but still continued to form a higher top and higher bottom on the Daily Bar Charts.

MARKET TREND FOR TUESDAY, JANUARY 06, 2015

There are chances that the Markets continue to display its consolidation mood and therefore we can expect a quiet opening to the trade. Post opening, the Markets are likely to trade in a capped range with the levels of 50-DMA continuing to act as major and important support.

The intraday trajectory and the volumes would be critical to decide the trend for the given session.

The levels of 8410 and 8445 would act as immediate supports. The levels of 8320 would act as important support at Close levels.

The RSI—Relative Strength Index on the Daily Chart is 56.3259 and it is neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD remains bullish as it trades above its signal line.

On the derivative front, the NIFTY January futures have shed over 7.29 lakh shares or 3.40 in Open Interest. This shows some amount of profit taking was done from the higher levels.

Going by pattern analysis, the trend continues to remain intact. However, after the Markets moved past the levels of 50-DMA it is now showing some tendency to consolidate and it is likely that it consolidates for a brief period before it continues with its up move again. However, the most important thing to watch out for is that the Markets will have to remain above 50-DMA to avoid any further weakness from creeping in.

Overall, the Markets consolidated today after Friday’s strong up move. It would be important for the Markets to maintain itself above the 50-DMA levels to avoid any short term weakness. So long as the Markets trade above this level, we can safely presume that the Markets are likely to continue with its up move. Stock specific 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, January 4, 2015

Daily Market Trend Guide -- Monday, January 05, 2015

MARKET REPORT January 05, 2015

After spending couple of session while resisting to its 50-DMA, the Markets saw a strong uptick in Friday’s session wherein it ended the day with decent gains. The Markets saw positive opening and post such decently positive opening, the Markets really never lost ground throughout the entire session. The Markets posted decent opening and then trade in sideways trajectory for some time until entering the afternoon session. The second half of the session saw some more betterment as the Markets surged ahead and went on to post the day’s high of 8410.60 in the late afternoon trade. It pared some minor gains from those levels but finally ended the day at 8395.45, posting a decent gain of 111.45 points or 1.35% while forming a distinctively higher top and higher bottom on the Daily Bar Charts.

MARKET TREND FOR MONDAY, JANUARY 05, 2015

Speaking purely on technical terms, the Markets have posted an breakout above its 50-DMA which it had broken on its way down and had become an resistance and therefore, has successfully continued with the pullback. Expect the Markets to open on a positive note and continue with its up move at least in the initial trade. In event of consolidation, the 50-DMA levels will now again act as support.

The levels of 8435 and 8490 would act as immediate resistance and the support would come in at 50-DMA in form of 8310.

The RSI—Relative Strength Index on the Daily Chart is 57.6989 and it remains neutral as it shows no bullish or bearish divergence. The Daily MACD has reported a positive crossover and it now trades above its signal line and is therefore bullish. On Weekly Charts, the RSI is 63.5144 and it remains neutral without showing any bullish or bearish divergence. The Weekly MACD is still bearish as it trades below its signal line but at the same time has flattened out and can attempt a positive crossover in coming Weeks.

On the derivative front, the NIFTY January futures have added over 2.87 lakh shares or 1.36% in Open Interest. This signifies further creation of longs and rules out any possibility of short covering in Friday’s session.

Returning to trend and pattern analysis, the Markets had been resisting to the 50-DMA levels, the levels which it broke on downside. When the Markets attempted pullback, this very level, which was a support earlier, had now become a resistance. The Markets resisted for couple of days to this level and it finally moved past it. Some more gains can be fairly expected in immediate short term.

Overall, the Markets are likely to extend their gains in the immediate short term. Some few days of range bound consolidations cannot be ruled out but overall trend certainly remains intact. One can continue to make moderate quality purchases. Overall, while keeping an eye on existing profits, positive outlook is advised for the day.