Gemstone Equity Research & Advisory Services

Friday, February 6, 2015

Daily Market Trend Guide -- Friday, February 06, 2015

MARKET REPORT February 06, 2015

The Markets ended with losses for the fifth day in a row as it pared more than 152-odd points from the high point of the day and ended the day with modest losses. The Markets saw a stable and quiet opening on expected lines and traded sideways in the first half of the session in a very narrow and capped range. The afternoon trade saw some more strength coming in as the Markets saw a sharp up move wherein it marked the levels of 8838.45 as intraday high. However, adverse news flow from Europe over Greece crisis played the spoil sport with anyway weak technical indicators. The Markets saw a equally sharp decline wherein it not only pared all of its robust gains but further dipped into negative as it formed its intraday low of 8683.65 coming off nearly 152-odd points from the high point of the day. It finally settled the day at 8711.70, posting a modest loss of 12 points or 0.14% while forming a higher top but lower bottom on the Daily Charts.

MARKET REPORT FOR FRIDAY, FEBRUARY 06, 2015

The Markets have remained dominated with volatile movement on either side and it is likely to remain this way for some more time. Expect a quiet opening in the Markets but the Markets are likely to trade with downside bias for some more time while it attempts to find a bottom through mild pullbacks which we can certainly expect. The level of 8830 will act as intermediate resistance in the immediate short term.

The levels of 8830 and 8875 will act as resistance and the level of 8640 will continue to act as immediate support for the Markets.

The RSI—Relative Strength Index on the Daily Chart is 57.6199 and it has reached its lowest value in last 14-days which is bearish. Further Bearish Divergence is also seen as the RSI has set a fresh 14-day low whereas the NIFTY has not yet done so. As we had mentioned in our yesterday’s edition of Daily Market Trend Guide, the Daily MACD has reported a negative crossover and now trade below its signal line and is now bearish.

On derivative front, the NIFTY February future have shed over 4.46 lakh shares or 1.77% in Open Interest. This signifies unwinding of long positions from higher levels.

Returning to pattern analysis, as we have often mentioned in our previous editions of Daily Market Trend Guide, that even if the Markets tests the levels of 8640, there will be no significant breach of any type on the Daily Charts. However, there are chances that the Markets now attempts to find bottom and halts its corrective activity in the near term. However, volatility will continue to remain ingrained in the day to come.

The Markets are now trading near its short term, but important support levels of 8640. While it is likely that the Markets will test these levels, at the same time, it is also likely to show intermittent pullbacks as well. In view of this, it is advised to continue to adopt highly stock specific approach and also continue to keep exposures at moderate levels.

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

Wednesday, February 4, 2015

Daily Market Trend Guide -- Thursday, February 05, 2015

MARKET REPORT February 05, 2015

Markets had a dull session for the most part of the day but volatility refused to go away as the Markets ended the session with fourth straight day with modest losses. The Markets saw positive opening and marked the levels of 8792.85 as the intraday high in the early trade. After trading briefly into the positive territory the Markets slipped in the red, however, continued to trade with modest losses. Most part of the session was spent in sideways trajectory with the Markets moving in much capped range with limited movement on either side. The second half of the Markets saw itself going back in the positive territory but continued to trade with capped range as such. The final hour of the trade saw volatility creeping in as the Markets saw a near vertical paring of gains as not only it dipped in the negative zone but also marked the levels of 8704.40 as its intraday low. It finally settled the day at 8723.70, posting a net loss of 32.85 points or 0.38% while continuing to form a lower top and lower bottom on the Daily Bar Charts.

MARKET TREND FOR THURSDAY, FEBRUARY 05, 2015

Markets are likely to remain in consolidation mode in the immediate short term. With the opening expected on a quiet note, it is important to note that post breaking out on the upside from 8640 levels, the Markets have retraced over 73% of its gains. This makes it more likely to remain in some consolidation / corrective mode for some more time in immediate short term.

The levels of 8790 and 8840 will act as immediate resistance for the Markets. The level of 8640 is likely to act as its immediate and important support.

The RSI—Relative Strength Index on the Daily Chart is 58.5275 and it has reached its lowest value in last 14-days which is bearish. Further, it has also formed a fresh 14-period low whereas NIFTY has not yet and this is Bearish Divergence. The Daily MACD remains bullish trading above its signal line but is moving towards reporting a bearish crossover.

On the derivative front, the NIFTY February futures have shed over 1.15 lakh shares or 0.45% in Open Interest. Though this shedding is nominal, but it is enough to suggest that no major shorts seem to have been created in the system.

Coming to pattern analysis, as mentioned earlier, the Markets have retraced and corrected over 73% of its gains from the levels of 8640, the levels which from which it gave an upward breakout. The Markets may attempt to reverse from here but at the same time, even if it continues to retrace and tests 8640 levels, it would be perfectly fine on the Daily Charts. Therefore, the levels of 8640 will be the important levels to watch out for in the immediate short term.

Overall, as of now, the Markets are not showing an signs of a pullback and therefore we will continue with our analysis on more or less the same lines. We continue to reiterate to continue to maintain adequate liquidity and keep overall exposures at moderate levels. While maintaining vigil on existing profits, continuance of cautious approach is advised for the day.