Gemstone Equity Research & Advisory Services

Tuesday, May 3, 2016

Daily Market Trend Guide -- Tuesday, May 03, 2016

MARKET TREND FOR Tuesday, May 3, 2016

After taking support on the 200-DMA which stands at 7846 today, the Markets slipped a bit below that on yesterday’s close. Today, we can once again expect the Markets to open on a quiet note and look for directions. The analysis remains more or less on similar lines today as well as the levels of 200-DMA will continue to pose resistance intraday as well as at Close levels. The intraday trajectory that the Markets form would be important to watch out for and any continuing weakness will see the Markets testing 7775 and 7750 levels.

For today, the levels of 7820 and 7845 will act as immediate resistance levels. The supports come in at 7775 and 7750 levels.

The RSI—Relative Strength Index on the Daily Chart is 54.1632 and it remains neutral as it shows no bullish or bearish divergence or any failure swing. The Daily MACD is bearish post reporting negative crossover and it now trades below its signal line.

On the derivative front, the NIFTY May futures have shed over 8.49 lakh shares or 4.11% in Open Interest. The NIFTY PCR stands at 0.90 as against 0.94.

Coming to pattern analysis, the Markets have retraced after forming an intermediate top at 7879 levels and have since then made multiple attempts to move past it. While doing so it also tested its 200-DMA for multiple times and while oscillating in a 140-odd points range for couple of days finally slipped below the 200-DMA. Though it continues to stay within a filter, the level of 200-DMA will continue to pose resistance intraday as well as at Close levels. In the immediate short term, the Markets may see some weakness continuing and if the weakness persists, then it may test some lower levels like 7750 and downwards. Having said this, if we take a intermediate view, the Markets have so far formed a strong bottom around 6580 levels and there would be no fear of reversal of trend so long as Markets trade above 7550 levels.

Overall, if we take a immediate short term view, there are chances that we may see the Markets remaining range bound and little weak while continuing to resist to 200-DMA. Purchases should be kept selective and limited to defensives and up moves should be continued to be utilized to protect profits. Continuance of positive outlook is advised for today as well.

Milan Vaishnav,

Consulting Technical Analyst

Member: Market Technicians Association, (MTA), USA
Member: Association of Technical Market Analysts, (ATMA), INDIA

www.EquityResearch.asia

http://milan-vaishnav.blogspot.com

+91-98250-16331

milan.vaishnav@equityresearch.asia

milanvaishnav@yahoo.com

Monday, May 2, 2016

Daily Market Trend Guide -- Monday, May 02, 2016

MARKET TREND FOR MONDAY, MAY 02, 2016

Though the Markets oscillated in a 80-odd points on Friday, it remained in a corrective mode, much on analyzed lines. Today as well, the Markets are likely to see a negative opening and is likely to open well below its 200-DMA which stands at 7850 today. The Markets will confirm its signs of fatigue that it had been displaying over past couple of days and this will keep the short term top of 7978 sacrosanct at least in the immediate short term.

For today, the levels of 7875 and 7920 will act as immediate resistance levels of the Markets. The supports come in much lower at 7760 and 7680 levels.

The RSI—Relative Strength Index on the Daily Chart is 57.4671 and it remains neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD has reported a negative crossover as we had expected in our previous edition and it is now bearish as it trades below its signal line. On the Weekly Charts, the Weekly RSI is 53.5804 and this too remains neutral as it shows no bullish or bearish divergence. The Weekly MACD stays bullish as it trades above its signal line.

On the derivative front, the NIFTY May futures have added over 5.25 lakh shares or 2.61% in Open Interest. The NIFTY PCR stands at 0.94 as against 0.92.

While having a look at pattern analysis, the Markets attempted to move past its 200-DMA but failed to give a clear breakout after that. It has oscillated some 150-odd points while forming an intermediate top at 7978 after failing to clear this level twice. On the Weekly Charts, not breakout has been attempted. Returning to Daily Charts, today’s expected negative opening is likely see the Markets opening below its 200-DMA levels and this level will now continue to act as resistance for the Markets. No significant strength can be expected from the Markets until it moves past its 200-DMA and clears the intermediate top that it has formed. In event of weakness continuing, it would not be a surprise if the Markets test 7700-7750 levels.

Overall, the Markets have started to confirm all the signs of fatigue that it has been displaying over last couple of days. There are bright chances that we see some more weakness lingering in the Markets. Any fresh exposures should be kept limited to the defensives while keeping overall purchases limited. Until the critical resistance levels are cleared, all the up moves should be utilized for booking profits at higher levels.