Gemstone Equity Research & Advisory Services

Thursday, March 19, 2015

Daily Market Trend Guide -- Friday, March 13, 2015

Friday, 13 March 2015

MARKET REPORT March 12 2015

The Correction that was witnessed in the markets for three trading sessions halted yesterday, as markets rebounded from its expected support zone of its 50 Day Simple and Exponential moving averages.

Yesterday, markets opened on a more than expected firm note. The strength in the markets continued for the entire trading session, till close. The market remained ranged bound near its intraday high through out trading session. The market broke out of the intraday trading range and staged sharp breakout in last hour of trading session.

The 30-share S&P BSE Sensex closed 0.95%, or 271.24 points, higher at 28,930.41, while the National Stock Exchange’s 50-share Nifty was up 0.87%, or 76.05 points, to end at 8,776.

Substantial amount of short covering was seen in the markets yesterday .

MARKET TREND FOR FRIDAY, 13 March 2015

Today, before technicals of the markets, a few external, non technical events that are likely to impact the markets today deserves a mention.

Today market sentiments will be positively boosted by late evening passage of Insurance Laws ( Amendment ) Bill by Rajya Sabha. Clues from overseas markets will also positively impact mood of the markets today. IIP and CPI data were released post close of the yesterday’s trading session. Industrial production growth slowed for a second straight month to 2.6% in January, compared with 3.2% in the previous month, while retail inflation inched up to a four-month peak of 5.37% in February. This has increased expectations of another round of rate cut by RBI, sooner than later.

In backdrop of these external factors impacting the markets today, let us pay attention to what prevails at the end of the day – technical analysis of markets.

It was mentioned here in previous edition that Pattern Analysis clearly indicates that market is taking intraday support in range of 50 Day SMA and EMA.- Moving Averages. Hence, till these are breached, it can be considered support zone intraday and at close for the market.

As expected, the correction which continued for three days, halted near these support levels. Pattern Analysis of Nifty indicates that the market has given a Higher Top Higher Bottom on its Daily High Low Chart. With this, at least for the time being, the 50 Day Simple and Exponential Averages ( at Close levels ) , which are 8658 and 8677 as of today have become good support for the market.

On Candle Chart, A white body occurred as Nifty closed higher than they opened. This is a positive. RSI- Relative Strength Index, which was a technical cause of concern till yesterday, as mentioned in yesterday’s edition of Daily Market Trend Guide, as it showed both Failure Swings and negative Divergence, has repaired itself with yesterday’s rise in Nifty. Technical analysis of Nifty’s RSI throws no causes of technical concerns, as The RSI is not currently in a topping (above 70) or bottoming (below 30) range and is showing neither Failure Swings or Divergence. Another important Momentum Indicator - Stochastic Oscillator - is 13.3990. This is an oversold reading.

These technicals of Nifty read along with the backdrop of above mentioned non technical factors today, it can be concluded that positive bias will be more or less intact today. Important resistance exists at 8792 ( 20 Day EMA) and 8871 ( Pattern ) and intraday, with supports at above mentioned range.

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

Daily Market Trend Guide -- Thursday, March 12, 2015

Daily Market Trend Guide Thursday, March 12, 2015

MARKET REPORT March 11 2015

As expected, correction continued in the market .The Markets yesterday started the session on a shaky note. It opened in mild positive zone, but as foretold, started losing ground in first hour of trade.

The session was volatile. The market encountered selling pressure at every rise, especially post noon session wherein it attempted a sharp pull back but met with selling at intraday high levels of the day resulting into equally sharp intraday correction. The market finally managed to close almost flat at 8699, with loss of 12 points.

The correction, which was foretold from here , continued for the third consecutive trading session.

MARKET TREND FOR THURSDAY, MARCH 12, 2015

Technically speaking, previous trading session has thrown an important Pattern Analysis reading. In spite of high volatility, and selling pressure at higher levels, the Market took support intraday at 8682 . This intraday support is almost the same that of an earlier previous session. Also, it is very near to its important support levels of 8644 as depicted by the Daily High Low charts of Nifty.

Also important is the 50 Day Exponential Moving Average of Nifty, which is 8671 as of today. 50 Day Simple Moving Average, as of today is 8647.90. Pattern Analysis clearly indicates that market in taking intraday support in range of these Moving Averages. Hence, till these are breached, it can be considered support zone intraday and at close for the market.

If these support zone is breached by the market, very strong support exists first at 8644 and then at 8504 levels. This zone will act as good support for the market in case of continuing correction.

Currently the MACD is bearish since it is trading below its signal line. However, The MACD is not in an Overbought zone. RSI – Relative Strength Index, has just reached its lowest value in the last 14 periods, and suffers from Failure Swings. This is bearish. Also, The RSI has set a new 14-period low while the security price has not. This is a bearish divergence.

With this technical reading of Important Indicators, it should be concluded that correction may continue, at least intraday, for a day or two. Till the above reading of RSI continues, the Market will face tough resistance and selling pressure at higher levels.

During this mode of correction, the market is expected to take support at the levels mentioned above as depicted by Pattern Analysis.

The Markets are expected to open on a flat to slightly positive note today. However, today also, we repeat that, we can expect some stability to come in but in any case volatility would continue to remain embedded in the Markets in the immediate short term. We continue to reiterate our advice on curtailing exposures at moderate levels.

Keep booking profits, if any, at every rise and be very cautious at every intraday high of the market today.