Gemstone Equity Research & Advisory Services

Tuesday, January 20, 2015

Daily Market Trend Guide -- Wednesday, January 21, 2015

MARKET REPORT January 21, 2015

The Markets saw a strong up move as it touched its fresh lifetime highs again fuelled by FII inflows and ended the day with robust gains. The Markets saw a positive opening and saw nearly one-way trend as it never really witnessed any selling pressure at any level during the day. After positive opening, the Markets saw itself trading with modest gains in sideways trajectory. Though it successfully maintained those gains, it saw fresh strength and strong up move in the second half of the session. It surged ahead and went on to move past its previous lifetime highs and formed a fresh intraday and lifetime high of 8707.90. It smartly maintained those gains and finally ended the day at 8695.60, posting a strong gain of 144.90 points or 1.69% while forming a sharply higher top and higher bottom on the Daily Bar Charts.

MARKET TREND FOR WEDNESDAY, JANUARY 21, 2015

The session is likely to remain a tricky and cautious affair for the Markets. The Markets, technically speaking, are expected to open and trade positive, at least in the initial trade. However, though it may continue to form fresh lifetime highs once again, some amount of consolidation is likely at higher levels. However, we may not witness any major profit taking, but the up move might be temporarily halted at higher levels.

The Markets now trade in uncharted territory once again. The expected resistance levels can be 8710 and 8145 while supports exist at 8640 and 8565 levels.

The RSI—Relative Strength Index on the Daily Chart is 68.9977 and it has touched its highest value in last 14-days which is bullish. It does not show any bullish or bearish divergence. The Daily MACD remains bullish while trading above its signal line. On the 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 8 rising windows in the last 50 candles--this makes the current rising window even more bullish.

On the derivative front, NIFTY January futures have added a massive 16.68 shares or 8.27% in Open Interest. This is a very significant addition in OI which clearly implies heavy buying and creation of fresh long positions.

Returning to pattern analysis, the Markets have moved past its previous lifetime high to form a fresh one. Theoretically speaking, the previous lifetime high is usually expected to pose some minor resistance before the Markets breaks out on the upside. Having this not happened, we cannot rule out some minor consolidation at higher levels. However, in the same breath, with the rally being highly liquidity driven, we can also expect the Markets to continue with its up move and show strength and this would be perfectly normal.

Overall, with the trend remaining extremely buoyant and intact, one can continue to make fresh purchases on selective levels. At the same time, the profits on existing long positions too need to be vigilantly monitored. Overall, while remaining vigilant at higher levels, positive 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

Sunday, January 18, 2015

Daily Market Trend Guide -- Monday, January 19, 2015

MARKET REPORT January 19, 2015,

The Markets had a volatile and range bound session again on Friday as it ended the day with minor gains after capped movement. The Markets saw a negative opening but formed its intraday low of 8452.25 in the early minutes of the trade. Post this negative opening, the Markets recovered in the morning trade to trade flat. The Markets witnessed a range bound sideways movement thereafter and hovered around its previous close levels. It was in the second half that the Markets saw some up move as it went on to add some gains. It surged a bit to form the day’s high of 8530.75 in the late afternoon trade. It hovered around this level and retraced a bit to finally end the day at 8513.80, posting a minor gain of 19.65 points or 0.23% while forming a similar top but higher bottom on Daily Bar Charts.

MARKET TREND FOR MONDAY, JANUARY 19, 2015

The Markets are likely to witness a flat to modestly positive opening and is expected to continue with its up move but initially witness a range bound trade. The Market is now trading above its all averages and under such structure is usually expected to extend its gains. However, given the technical structure of the Charts, some ranged movements also cannot be ruled out.

The levels of 8545 and 8590 would act as immediate resistance on Daily Charts whereas the levels of 8452 and 8410 can act as support.

The RSI—Relative Strength Index on the Daily Chart is 62.0565 and it has reached its highest value in last 14-days which is bullish. It does not show any bullish or bearish divergences. The Daily MACD is bullish as it trades above its signal line. On Weekly Charts, RSI is 64.5743 and remains neutral as it shows no bullish or bearish divergence or any failure swing. The Weekly MACD remains bearish trading below its signal line.

On derivative front, the NIFTY January futures have shed over 5.70 lakh shares or 2.77% in Open Interest. This, as we have been mentioning in our previous editions of Daily Market Trend Guide, is little cause of worry as each rise is being attributed more to short covering than fresh buying. It is necessary for the Markets that it sees fresh positions being built up on the long side which would fuel its upside.

Coming to pattern analysis, the Markets currently trades above all of DMAs. In event of any downside, the 50-DMA is again expected to act as support. Given the overall structure and F&O data, there are also chances that the Markets see some ranged movements before it continues with its up move. The overall trend remains intact.

All and all, it is necessary that we continue to exercise caution in the Markets. There are chances that the Markets see some selling pressure from higher levels and consolidate before it moves up again. This ranged movement is also likely to see some volatility ingrained in it. Overall, it is advised to refrain from aggressive purchases. Cautious optimism is advised for the day while adopting highly stock specific approach.