Gemstone Equity Research & Advisory Services

Thursday, July 9, 2015

Daily Market Trend Guide -- Thursday, July 09, 2015

MARKET REPORT July 09, 2015

Chinese mess took toll on Indian Markets as well along with other Asian peers as the Markets remained corrective today ending with good amount of losses though the levels of 200-DMA has held out as support at close levels. The Markets saw a gap down opening on expected lines and traded with losses in the morning trade. The losses deepened in the afternoon trade as the Markets went on to form the day’s low of 8341.40 in the mid afternoon trade. Post opening of the European Markets, NIFTY did make an attempt to pullback and did manage to recover some part of its losses. However, the last half hour of the trade saw weakness returning again and took the Markets very near to its low point of the day. Markets finally settled the day at 8363.05, posting a net loss of 147.75 points while forming a lower top and lower bottom on the Daily Bar Charts.

MARKET TREND FOR THURSDAY, JULY 09, 2015

Markets are expected to open on a quiet and flat note and look for directions. Markets have taken support at its 200-DMA at close levels and are within its filter. Today’s session remains very critically important for the Markets and today’s behaviour of the Markets vis-à-vis the levels of 200-DMA would determine the trend for the immediate short term. Irrespective of the opening, it would be very important for the Markets to move past the levels of 200-DMA and trade above that.

For today, the levels of 8384 and 8475 are immediate resistance levels for the Markets. The supports come in at 8320 and 8250 levels.

The RSI—Relative Strength Index on the Daily Chart is 52.0088 and it has reached its lowest value in last 14-days which is bearish. Further, the RSI has set a fresh 14-day low but NIFTY has not yet. This is Bearish Divergence. However, the Daily MACD remains bullish as it trades above its signal line.

On the derivative front, NIFTY July futures have shed over 4.08 lakh shares or 2.19% in Open Interest. This signifies unwinding of the positions to some extent. The NIFTY PCR stands at 1.1 as against 1.14.

Looking at pattern analysis, the Markets have attempted to take support at its 200-DMA at Close levels. It has closed a notch below that but remains within its filter. It would be very critically important to see that the Markets moves past the levels of 200-DMA which is 8383 today. Failure to do so will induce some weakness in the near term for the Markets and will also put some question markets on the reversal that it has confirmed in the previous sessions and also make it vulnerable to test its 50-DMA which is 8270 levels.

All and all, though we are likely to see a quiet opening in the Markets, the behaviour of the Markets vis-à-vis 200-DMA would be critical to watch out for. It would be imperative for the Markets to maintain levels above 8383 and Close above that. Fresh purchases may be made but on very selective and in limited quantity. More liquidity should be maintained and provided for until the Markets take a directional bias above 200-DMA. Cautious outlook is advised for the day.

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, July 8, 2015

Daily Market Trend Guide -- Wednesday, July 08, 2015

MARKET REPORT July 08, 2015

Markets spent a cautious session yesterday as it consolidated on expected lines and ended the day with minor losses. The Markets saw a quiet opening and soon formed its intraday high of 8561.35 in the early minutes of the trade. However, soon it pared its opening gains and traded with modest gains in the initial trade. The Markets continued to move sideways in a narrow range for most part of the session. It was in the late afternoon trade that the Markets got weaker and dipped into the negative territory. It went on to form the day’s low of 8483.85. However, again, some recovery was seen from these levels and the Markets finally ended the day at 8510.80, posting a minor loss of 11.35% or 0.13% while forming a higher top and higher bottom on the Daily Bar Charts.

MARKET TREND FOR WEDNESDAY, JULY 08, 2015

Markets once again remain today at a critical juncture. Even with all technical indicators in place, the Markets are likely to open on a negative note following global weakness. In event of the Markets witnessing a gap down opening again, it is likely to find itself below its 100-DMA levels. It would be crucially important for the Markets to maintain support of its 100-DMA at Close levels. In event of the Markets breaching these levels, it may be seen testing its 200-DMA.

The levels of 8470 and 8410 are immediate supports for today. Levels of 8550 and 8590 would be immediate support for the Markets.

The RSI—Relative Strength Index on the Daily Charts is 63.9909 and it remains neutral as it shows no bullish or bearish divergence or failure swings. The Daily MACD remains bullish as it comfortably trades above its signal line.

On the derivative front, the NIFTY July futures have further added over 8.50 lakh shares or over 4.79% in Open Interest. This suggests some good amount of shorts have been added post yesterday’s high and some fresh buying too is indicated from these levels. The NIFTY PCR stands at 1.13 as against 1.12.

Coming to pattern analysis, the Markets have attempted to move past its 100-DMA levels after confirming its bottom after forming a higher bottom at 8195. However, given the rise in the Markets in last couple of session, it is very much likely that the Markets may consolidate at these levels. In any case, the levels of 100-DMA, or in little worse scenario, the 200-DMA is likely to act as its major support. Given the technical indicators and as supported by F&O data, the Markets are likely to have very limited downside. However, in order to consolidate and avoid any weakness, the Markets will have to maintain itself above 100-DMA at Close. If this level breaches, the Markets will find itself consolidating in a little wider range.

Overall, the Markets are likely to see a weak opening but given the technical indicators and the F&O data, we are again likely to see improvement as the session progresses. The Markets are most likely to take support at its 100-DMA at Close levels. If this level breaches, the Markets may find itself consolidating in a wider range with the levels of 200-DMA acting as support. However, we strongly reiterate not to short the Markets as the Markets will have very limited downsides. As usual, while using any initial downsides as a buying opportunity, cautious optimism is advised for the day.