Gemstone Equity Research & Advisory Services

Thursday, May 28, 2015

Daily Market Trend Guide -- Thursday, May 28, 2015

MARKET REPORT May 28, 2015

Though the Markets ended the day on a flat note, it had a very volatile session during the day after opening on a much lower note. The markets saw weaker than expected opening and after such opening, formed intraday low of 8277.95 in the early minutes of the trade. The Markets saw recovery from the lows of the day in the morning trade itself and attempt to moved past the levels of 200-DMA. It moved in a sideways trajectory after recovering most part of its losses for the remaining part of the session but the Markets also saw some range bound volatile movements. It came off from its previous close but recovered again. It maintained the levels a notch above its 200-DMA and finally ended the day at 8334.60, posting a flat close with minor loss of 4.75 points or 0.06% while continuing to form a lower top and lower bottom on the Daily Bar Charts.

MARKET TREND FOR THURSDAY, MAY 28, 2015

Expect the Markets to open today on a flat to modestly positive note and trade in a caped range in the initial trade. The Markets have attempted to move past its 200-DMA levels yesterday after opening lower and today, it is very much likely to continue with this attempt and also attempt to regain some stability by trading modestly above 200-DMA. The behaviour of the Markets vis-à-vis the levels of 200-DMA will be crucial to watch out for.

The levels of 8375 and 8450 will act as immediate resistance for today whereas the levels of 8325 and 8250 will act as immediate supports.

The RSI—Relative Strength Index on the Daily Chart is 48.2710 and it continues to remain neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD continues to remain bullish while trading above its signal line.

On the Derivative front, the NIFTY May future have shed 21.49 lakh shares or 19.99% in Open Interest while the June futures have added 36.01 lakh shares or 54.85% in Open Interest. There has been net addition of 9 lakh shares in the OI. Overall, the NIFTY and market wide rollovers have been in line with its last 3 months average.

Coming to pattern analysis, the Markets have been witnessing some short term consolidation with a bearish undertone after it attempted to pullback after forming recent lows. However, though it has so far managed to keep its head above 200-DMA after the pullback, the behaviour of the Markets vis-à-vis the levels of 200-DMA would be extremely important. It will have to keep its head above the 200-DMA levels if it has to attempt to continue with its reversal. Though the Markets have so far trade above this level, it will confirm the reversal only after it moves past its upper levels of broad trading range.

All and all, the Markets are still not completely out of the woods. The Markets are likely to pose a modestly positive opening but it will have to maintain levels above 200-DMA. Today being the expiry day, the rollovers would dominate the activity. Further, the other important triggers for the Markets would be the GDP data coming out tomorrow and the RBI Policy on June 3^rd. With some amount of volatility likely overall cautious approach is advised for today.

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, May 27, 2015

Daily Market Trend Guide -- Wednesday, May 27, 2015

MARKET REPORT May 27, 2015

Though the Markets pared its losses in the final hour of the trade, it continued to end the day with a modest loss while taking support at its all important 200-DMA at Close levels. Markets saw a flat opening and remained very briefly into the positive territory while forming its day’s high of 8378.90 in the very early minutes of the trade. However, after remaining very briefly in the positive, the Markets came off and traded in negative territory. It continued to trade with capped losses in the first half of the session but the second half saw some more weakness creeping in. The Markets went on to form the day’s low of 8320.05. However, it attempted to take support again at its 200-DMA and it saw some paring of losses from those levels. The Markets finally settled the day at 8339.35, posting a modest loss of 30.90 points or 0.37% while continuing to form a lower top and lower bottom on the Daily Bar Charts.

MARKET TREND FOR WEDNESDAY, MAY 27, 2015

Today, we enter into penultimate day of expiry of current series. Along with this, this also remains a crucially important day for the Markets that can impact its trend in the immediate short term. We are likely to see negative opening today and there are chances that the Markets sees itself opening below its 200-DMA. If this happens, it would be very critically important for the Markets to move past this level again. Until this happens, we would continue to see some bearish undertone in the Markets.

For today, the levels of 8380 and 8450 would act as immediate resistance levels. The supports are expected at 8310 and 8230 levels.

The RSI—Relative Strength Index on the Daily Chart is 48.5271 and it remains neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD still continues to remain bullish as it trades above its signal line.

On the derivative front, the NIFTY May futures have shed over 11.64 lakh shares or 9.77% in Open Interest whereas June series have added over 20.99 lakhs shares or 47.02% in Open Interest. Overall, on net basis, NIFTY has added over 9.50 lakhs shares in Open Interest. This signifies rollovers of short positions in the Markets. NIFTY PCR stands at 0.99 as against 1.03.

Coming back to pattern analysis, the Markets gave a technical pullback after posting its recent lows on May 7^th. During this pullback, the Markets managed to move past its 200-DMA which it broke on the downside earlier. However, the Markets are not able to confirm this reversal as at least as of today, it has failed to post any higher bottom after recent lows. Today as well, the opening might see the Markets below 200-DMA and therefore, it would be of paramount importance for the Markets to move past this 200-DMA levels again. Until this happens we would continue to witness bearish undertone in the Markets.

All and all, non-technical factors such as currency weakness, weak earnings from key stocks, etc., will continue to weigh on the Markets as well. However, the Markets still are under the process of confirming its reversal and as of now, the bottom of May 7^th holds valid and crucially important. Absence of delivery based buying in the Index components is also weighing in the Markets. Given this scenario, we would reiterate to remain extremely light on the exposure and maintain adequate liquidity until the directional bias is established.