Gemstone Equity Research & Advisory Services

Tuesday, February 3, 2015

Daily Market Trend Guide -- Wednesday, February 04, 2015

MARKET REPORT February 04, 2015

The Markets continued to modestly correct and end the day once again in a red in a volatile session after a positive opening. The Markets saw a positive opening and formed its intraday high of 8837.30 in the very early moments of the trade. After remaining briefly in the positive the Markets pared its morning gains to trade flat. It waited for the much awaited RBI Credit Policy and this stood out on expected lines as the RBI kept its benchmark rates unchanged and lowered SLR by 0.50% or 50bps. After some initial knee jerk reaction, the Markets drifted lower to form the day’s low of 8726.65 in the mid afternoon trade. It saw a very sharp recover soon after to trade very near to its previous close recovering much of its losses. However, it drifted again and the Markets finally ended the day at 8756.55, posting a net loss of 40.85 points or 0.46% forming a lower top and lower bottom on the Daily Bar Charts.

MARKET TREND FOR WEDNESDAY, FEBRUARY 04, 2015

Expect a quiet start to the Markets again as the RBI Policy review remained a non event on expected lines. Speaking on technical terms, we will continue to see the Markets remain in consolidation and in corrective mood. The levels of 8640 will continue to act as a good pattern support at Close levels in the immediate short term.

The levels of 8830 and 8895 will remain immediate resistance levels for the Markets. The support will come in much lower at 8640 levels.

The RSI—Relative Strength Index on the Daily Chart is 60.9686 and it remains neutral while showing no 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 added over 4.26 lakh shares or 1.71% in Open Interest. This signifies that some amount of shorts seem to have been added in the system.

Coming to pattern analysis, as mentioned in our previous editions of Daily Market Trend Guide, the Markets are correcting after forming its immediate top. The Markets will remain in some corrective mode in the immediate short term but the pattern support at 8640 will act as important levels to watch out for.

Apart from technical structure which certainly remains mildly bearish, the outcomes of Delhi elections will also cast its effect on overall sentiments. Given this thing, overall primarily dominated with little bearish technicals, the Markets may see itself continuing to correct. In event of any up move, the Markets will continue to trade in a broad trading range. Secotoral out performance would continue. While maintaining enough liquidity, selective approach 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

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.