Gemstone Equity Research & Advisory Services

Tuesday, May 19, 2015

Daily Market Trend Guide -- Tuesday, May 19, 2015

MARKET REPORT May 19, 2015

Markets had a buoyant session yesterday especially in the second half of the session as it moved past its 200-DMA and ended the day with decent gain. The Markets saw a positive opening on expected lines and remained in a narrow range with capped gains in the first half of the session while it continued to resist to its 200-DMA. As mentioned, the second half of the session some more strength coming in as the Markets witnessed quite decisive and secular up move. It went on to form the day’s high of 8384.60 and maintained those gains until the end. It finally settled the day at 8373.65, posting a decent gain of 111.30 points or 1.35% while forming a higher top and higher bottom on the Daily Bar Chart.

MARKET TREND FOR TUESDAY, MAY 19, 2015

We can once again expect the Markets to consolidate after yesterday’s gains and it would be crucially important for the Markets to maintain levels above of 200-DMA in today’s trade. Today, we can expect a flat to modestly negative opening and we can see some ranged consolidation in the first half with the levels of 200-DMA expected to act as support in case of any weakness. There has been dearth of broad delivery based buying and this is something that will keep the Markets under some check.

For today, the levels of 8410 and 8465 will act as immediate resistance for the Markets. The supports will come in at 8305, near its 200-DMA.

The RSI—Relative Strength Index on the Daily Chart is 51.0833 and it has reached its highest value in last 14-days. This is bullish. It does not show any bullish or bearish divergence or any failure swing. The Daily MACD is bullish while it trades above its signal line.

On the derivative front, the NIFTY May futures have shed over 3.85 lakh shares or 2.75% in Open Interest. This once again indicates short covering and attributes yesterday’s rise more to short covering than fresh buying.

While looking at pattern analysis, the Markets yesterday resisted to its 200-DMA in the first half of the session but finally managed to move past and close above it. It would be now crucially important for the Markets to maintain itself above 200-DMA. This level is now expected to act as support in event of any immediate short term weakness. Any breach below this will bring the Markets back into the broad trading range that it has been trading in.

All and all, the lead indicators and over all structure of the Charts point towards positive bias with some amount of short term consolidation that might happen. However, Markets will also need delivery based buying to make a sustainable up move apart from just short covering that it is witnessing. Intermittent volatile bouts cannot be ruled out. Overall, while maintaining modest exposure, positive caution is advised.

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, May 18, 2015

Daily Market Trend Guide -- Monday, May 18, 2015

MARKET REPORT May 18, 2015

Markets consolidated on Friday as it moved in a capped range in the entire session and ended the day with modest gains, though it still continued to rule below its 200-DMA. The Markets saw a positive opening and immediately formed its intraday high of 8279.20 in the very early minutes of the trade. Soon after that the Markets saw sudden paring of gains in the morning trade as it came off from those levels to trade flat. However, the rest of the session was spent recovering from those levels but the Markets never really moved decisively on the either side. It continued to trade in a capped range but remained in positive territory for the entire session. It finally ended the day at 8262.35, posting a modest gain of 38.15 points or 0.46% while forming a higher top and higher bottom on the Daily Bar Charts.

MARKET TREND FOR Monday, 18 May 2015

If we put it in plain words, despite forming a temporary bottom in the previous sessions, the Markets continue to remain in little precarious position. Today, we can expect a flat to mildly positive opening but this would have the Markets open near its 200-DMA. The Markets have closed below 200-DMA and therefore the behaviour of the Markets after opening as against its 200-DMA would be crucially important. It would be very necessary for the Markets to move past and remain above its 200-DMA in order to attempt a reversal.

For today, the levels of 8300 and 8365 will act as immediate resistance for the Markets. The supports come in at 8160 and 8135 levels.

The RSI—Relative Strength Index on the Daily Chart is 46.0736 and it remains neutral showing no bullish divergence or any failure swings. The Daily MACD remains bullish as it trades above its signal line. On the Weekly Charts, the Weekly RSI is 46.3706 and this too is neutral without showing any bullish or bearish divergence or any failure swings. The Weekly MACD remains bearish while trading below its signal line.

On the derivative front, NIFTY May futures have shed 71,525 shares or 0.51% in Open Interest. This is a very nominal and insignificant change in Open Interest. It is also NIFTY Futures have dipped into a nominal discount on the Friday’s trade which is a positive factor which indicates a potential formation of bottom.

Coming to pattern analysis, the Markets are still ruling below its 200-DMA on Daily Charts after forming a potential bottom. It would be imperative for the Markets to move past and sustain above the levels of 200-DMA in order to confirm this potential bottom formation and continue with its successful reversal. On the Weekly Charts, the Markets have taken support at its 50-DMA levels.

All and all, though lead indicators and F&O data point towards positive bias in the Markets, cautious approach should still be maintained until the Markets moves past the 200-DMA levels and is out of the broad trading band and above 8350 levels. Until this happens we will remain exposed to possibilities of some volatile intermittent swings on the either side.