Gemstone Equity Research & Advisory Services

Thursday, May 5, 2016

Daily Market Trend Guide -- Thursday, May 05, 2016

MARKET TREND FOR THURSDAY, MAY 05, 2016

We continue to keep today’s analysis on more or less on similar lines. The Markets have continued its moderate drift over couple of days and is likely to continue to do so. Today, we can once again see the Markets opening on a quiet note and look for directions. Some up move can be seen but it would be extremely important to see if the Markets are able to sustain any intermediate up moves. The intraday trajectory of the Markets would be important to watch out for.

For today, the levels of 7750 and 7810 will act as immediate resistance for the Markets. The supports come in at 7675 and 7610 levels.

The RSI—Relative Strength Index on the Daily Chart is 47.3244 and it has reached its lowest value in last 14-days which is bearish. It does not show any bullish or bearish divergence.

The Daily MACD remains bearish as it trades below its signal line.

On the derivative front, the NIFTY May futures have shed over 6.03 lakh shares or 3.05% in Open Interest. This certainly suggest offloading / unwinding of long positions in the Markets. The NIFTY PCR stands at 0.82 as against 0.86.

Coming to pattern analysis, the Markets have continued to drift steadily after it’s broke its 140-odd point trading range which had support at its 200-DMA which stands at 7840. This level, i.e. 200-DMA will continue to pose resistance to the Markets in the immediate short term until the Markets move past this level. Having said this, if the weakness persists, the Markets are likely to test its pattern support at 7675 levels. If this level is breached, we will see some more weakness creeping into the Markets. On the up side, they are likely to remain capped in a limited range. Any weakness will not rule out the possibility of the Markets testing 7550 levels wherein multiple supports converge.

Overall, we may see some stability returning to the Markets. However, there are chances that this remains a temporary affair and any up moves may get possibly sold into. The lead indicators read along with the F&O data suggest that we may continue to see some more weakness in the immediate short term and any respite from this, if any, will remain temporary. Fresh buying may be done at lower levels but at the same time, profits should be protected with every up move.

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

Wednesday, May 4, 2016

Daily Market Trend Guide -- Wednesday, May 04, 2016

MARKET TREND FOR WENDESDAY, MAY 04, 2016

Though the Markets had a better than expected first half of the session yesterday, it continued to resist at its 200-DMA very much on expected lines and ended yet another day with losses. Today, we can expect the Markets to open again on a lower note and trade negative at least in the initial trade. The Markets are expected to continue to show weakness and in event of any upswings, the 200-DMA which is 7843 will continue to pose resistance.

For today, the levels of 7775 and 7810 will act as immediate resistance levels for the Markets. The supports come in at 7710 and 7650 levels.

The RSI—Relative Strength Index on the Daily Chart is 50.0089 and it has reached its lowest level in last 14-days which is bearish. The RSI has made a fresh 14-period low while NIFTY has not yet and this is Bearish Divergence. The Daily MACD stays bearish as it trades below its signal line.

On the derivative front, the NIFTY May futures have 17,100 shares or nominal 0.09% in Open Interest. This figure remains nominal and NIFTY PCR stands at 0.86 as against 0.90 yesterday.

Coming to pattern analysis, the Markets finally gave up its support of 200-DMA after oscillating in a 140-odd points range with the support of 200-DMA and the upper band of 7980. Having said this, it is important to note that with the Markets now slipping below 200-DMA level, any upswings will continue to face resistance at this level. In case of weakness continuing, it is likely to test its multiple support levels around 7600-7550 levels. These levels have 2 of its DMAs converging and also has a pattern support around these levels. Even if the Markets tests these levels, there won’t be any significant breach of trend that the Markets have formed after forming lows around 6800 in February. It is also important to note that any further breach below this will dent the reversal of the Markets and will have some structural damage to the Charts.

Overall, it would be important to observe Market’s behavior around 200-DMA in case of any up move and around 7550 in case of further weakness. It is likely that the Markets will see some intermittent selling bouts from higher levels and we continue to advice to utilize these up swings below 200-DMA for booking profits and protecting existing positions. Volatility will continue to remain ingrained in the Markets. Continuance of cautious outlook is advised for today.