Gemstone Equity Research & Advisory Services

Tuesday, May 26, 2015

Daily Market Trend Guide -- Tuesday, May 26, 2015

MARKET REPORT May 26, 2015

Markets turned bit corrective today as it opened negative and grew weaker in the second half to end the day with losses. The Markets saw a negative opening on expected lines and traded within a narrow range with capped losses. It spent the morning trade in a sideways manner on low volumes as many major Markets like UK, US and Hong Kong remained shut which led to a lesser participation. However, it was in the second half that the Markets saw some weakness intensifying and it grew weaker. It went on to form the day’s low of 8364.15 towards the end of the session. While no major recovery was seen at lower levels, it finally ended the day at 8370.25, posting a net loss of 88.70 points or 1.05% while forming a lower top and lower bottom on the Daily Bar Charts.

MARKET TREND FOR TUESDAY, MAY 26, 2015

After the Markets remaining in corrective mode yesterday, we can expect a quiet opening in the Markets today. The Markets are likely to open on a flat to mildly positive note and look for directions. They are likely to continue to remain in a broad trading range with the levels of 200-DMA acting as support and the levels of 50-DMA acting as resistance in the immediate short term.

Today, the levels of 8420 and 8465 will act as immediate resistance for the Markets. The supports come in at 8320 levels.

The RSI—Relative Strength Index on the Daily Chart is 50.1338 and it remains neutral as it does not show any bullish or bearish divergence or any failure swing. The Daily MACD remains bullish while trading above its signal line.

On the derivative front, the NIFTY May futures shed over 9.50 lakh shares or 7.39% in Open Interest while June NIFTY Futures added over 6.81 lakh shares or 18.01% in Open Interest showing a net of decline in Open Interest. However, modest rollovers have begun and they are expected to pick up as well. The NIFTY PCR stands at 1.03.

Going by pattern analysis, the Markets currently trade in a broad range with the levels of 200-DMA expected to act as support and the levels of 50 and 100-DMA posing resistance on the upside. However, given the expiry week, the Markets are likely to continue to remain in a broad trading range. Also, the Markets will have to see a conviction based up move with more amount of delivery buying taking place if it has to move past the upper levels of the trading range. Broadly speaking, the Markets have attempted to find a bottom after posting lows as on May 7^th and has attempted a pullback since then. However, it needs to form a higher bottom anytime now and move past the remaining two DMAs in order to confirm the reversal.

All and all, until the Markets moves past its 50 and 100-DMA, it would continue to witness such intermittent bouts of profit taking. Though 200-DMA is all likely to act as major support in case of any downside, the Markets may continue to remain volatile and trade in a broad range. It is advised to continue to remain light on exposure while maintaining a stock specific outlook in the Markets.

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 25, 2015

Daily Market Trend Guide -- Monday, May 25, 2015

MARKET REPORT May 25, 2015

The Markets continued with its up move on Friday as well and ended the day with modest gains but at the same time, it did so in a bit reluctant manner. The Markets saw a quiet and positive opening on expected lines and in the first half of the session it remained in upward rising channel and remained in positive territory. After stable opening, the morning trade saw some strength in the Markets and it kept on making fresh gradual highs while demonstrating some strength. By afternoon trade, the Markets saw some continuing stability while it formed the day’s high of 8489.55. However, the second half of the trade saw some paring of gains. Markets came off from its intraday highs and pared nearly half of its gains. Though it did not dip into the negative, it finally ended the day at 8458.95, posting a modest gain of 37.95 points or 0.45% while continuing to form a higher top and higher bottom on the Daily Bar Charts.

MARKET TREND FOR MONDAY, MAY 25, 2015

We can expect a muted start to the Markets today. The Markets may open on a very quiet note and might continue to trade in a given range while showing little negative bias. Though all cues remain positive some amount of minor weakness may be seen because of some stock specific pressure that we might see today. Today, we also enter into expiry week and therefore we can expect bulk of the activities being dominated with rollover centric actions.

For today, the levels of 8470 and 8550 will act as immediate resistance for the Markets. The supports would come in at 8380 and 8320 levels.

The RSI—Relative Strength Index on the Daily Chart is 54.9866 and it has reached its highest value in last 14-days which is bullish. It does not show any bullish or bearish divergence. Daily MACD remains bullish as it trades above its signal line. On the Weekly Chart, Weekly RSI is 51.6538 and it remains neutral showing no bullish or bearish divergence or any failure swings. Weekly MACD continues to remain bearish as it trades below its signal line.

On the derivative front, NIFTY May futures have shed over 2.79 lakh shares or 2.12% in Open Interest. NIFTY June Futures have added over 12.70 lakh shares or 50.3.5% in the OI. NIFTY PCR stands at 1.11.

Looking at pattern analysis, the Markets have resisted to its 50-DMA at Close levels and this level is likely to continue to act as resistance in the immediate short term followed by the 100-DMA. On the Daily Chart, there is slight structural weakness as the 50-DMA has cut 100-DMA from above couple of sessions back and this may infuse some very short term weakness for the Markets. Having said this, in event of any weakness, the Markets may not show any significant downside but may continue to trade in a broad trading range with the levels of 200-DMA acting as major support. On the Weekly Charts, all DMAs remain positive and the Markets continue to trade above all of its DMAs.

All and all, keeping this in view, the Markets may not still completely be out of woods. It has continued to face shortage of delivery based buying. At the same time the lead indicators and other factors do not present any significantly negative cues as well. While remaining dominated with rollover centric activities in the coming days, it would continue to show some stock specific out performance. Overall, with no major downsides expected, ranged consolidation is likely to continue in the Markets.