Gemstone Equity Research & Advisory Services

Monday, February 2, 2015

Daily Market Trend Guide -- Tuesday, February 03, 2015

MARKET REPORT February 03, 2015

Markets saw a very volatile session but in the end settled the day with minor losses ahead of RBI Credit Policy review. The Markets saw a modestly negative opening and traded with capped losses in the morning trade. It weakened further in the afternoon trade as it formed its intraday low of 8751.10. The Markets continued to spend some time in sideways trajectory and the second half of the Markets saw some sharp recovery. It saw a near parabolic rise as it not only went into the positive territory but also formed its day’s high of 8840.80. It rose nearly 90-odd points from the low point of the day. However, volatility refused to go away and the Markets retraced some of these gains. It finally settled the day at 8797.40, posting a minor loss of 11.50 points or 0.13% while forming a lower top and lower bottom on the Daily Bar Charts.

MARKET TREND FOR TUESDAY, FEBRUARY 03, 2015

The Markets have chosen to consolidate on Close levels. We can expect a quiet opening to the session and the Markets would react to the RBI Credit Policy review coming up. The opening trade is likely to see ranged movement but the Markets would give some knee-jerk reactions to the RBI inputs. Though any immediate rate cut is discounted by the Markets but the any cut would trigger a positive surprise.

The levels of 8850 and 8925 would act as immediate resistance to the Markets. The supports would come in at 8750 and 8670 levels.

The RSI—Relative Strength Index on the Daily Chart is 64.0535 and it remains neutral without showing any bullish or bearish divergences or failure swings. The Daily MACD continues to remain bullish trading above its signal line.

On the derivative front, the NIFTY February futures have shed over 5.36 lakh shares or 2.10% in Open Interest. This very clearly suggests that the pullback that we saw in the previous session was purely on account of short covering from lower levels.

Coming to pattern analysis, as mentioned in earlier editions, the Markets have formed an immediate top of 8985 levels and have seen correction. It resisted to a rising trend line and in the process this rising trend line continues to remain an extended resistance for the Markets. Any up move, shall occur only after Markets moves past 8985-95 levels after a proper and fresh area pattern. Until this happens, we would continue to see a broad ranged consolidation in the Markets.

Overall, the Markets are going to remain volatile with some negative bias. Positive trigger would come in for the short term only with the RBI cutting rate again but this remains discounted to a much larger extent by the Markets as no cut is expected. Speaking purely on technical terms, the Markets would continue to consolidate with mild downward bias. It is continued to adopt a cautious outlook 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, February 1, 2015

Daily Market Trend Guide -- Monday, February 02, 2015

MARKET REPORT February 02, 2015

Markets traded precisely on dotted lines as analyzed in our previous editions of Daily Market Trend Guide as it finally saw much imminent correction from higher levels as the levels of 8985 held out as immediate top. The Markets saw a relatively quiet start and initially trade positive in the very early minutes of the trade while forming the day’s high of 8996.60. Since then, it transformed itself into falling trajectory and remained so throughout the session. It kept forming gradual lows during the day and in the second half of the session, the fall intensified a bit and the Markets went on to form the day’s low of 8775.10, coming off more than 200-odd points from the high point of the day. Very minor recovery was observed but it finally settled the day at 8808.90, posting a net loss of 143.45 points or 1.60% while forming a slightly higher top but sharply lower bottom on the Daily Bar Charts.

MARKET TREND FOR MONDAY, FEBRUARY 02, 2015

We may again see a quiet to subdued opening in the Markets. However, it is important to note that speaking purely on technical terms; the Markets are very likely to consolidate and drift lower or at least remain in a trading range. The level of 8985 has continued to act as a immediate top for the Markets and this level would continue to act as key resistance levels in coming days.

The levels of 8985-8995 would continue to act as key resistance level for the Markets. The supports would come in at 8690 and 8640 levels.

The RSI—Relative Strength Index on the Daily Chart is 64.9121 and it has just moved below its “oversold” area which is bearish. It does not show any bullish or bearish divergence or failure swing. The Daily MACD continues to remain bullish trading above its signal line. On Weekly Charts, the Weekly RSI is 69.4750 and like Daily Charts, this too has moved below from “oversold” area which is bearish. Also, this too remain neutral showing no bullish or bearish divergences or any failure swing. The Weekly MACD remains bullish trading above its signal line.

Coming to pattern analysis, the Markets have resisted to is quiet old rising trend line at 8985 levels. Though it did attempt to move past that level while making a high of 8996, it failed to do so. Therefore, this level of 8985 now continues to remain a immediate top for the Markets. It would be perfectly justified for the Markets to consolidate a bit more at this level. Even if it retraces near 8640 levels, it would be perfectly normal for the Markets to do so and there would be no structural breach on the Daily Charts. Until this happens, we will continue to see the Markets in a range bound consolidation.

While keeping the overall analysis on the same lines, we continue to reiterate to maintain adequate liquidity while keeping overall exposure moderate. While continuing to vigilantly protect profits at higher levels, we will also continue to see stock specific action. Therefore, while remaining highly selective, continuance of caution is advised for the day.