Gemstone Equity Research & Advisory Services

Tuesday, May 10, 2016

Daily Market Trend Guide -- Tuesday, May 10, 2016

MARKET TREND FOR TUESDAY, MAY 10, 2016

Markets showed a robust up move yesterday and moved past its 200-DMA by a notch and ended near the high point of the day. Today, some amount of subdued opening can be expected and the Markets are once again likely to consolidate around its 200-DMA, which is 7830 today. The overall structure of the Markets is bullish and the support zones of 7670-7720 have hold good with the upper resistance levels remaining at 200-DMA and further near 7970 levels. The overall upward momentum within this broad range is likely to remain in the immediate short term.

For today, the levels of 7900 and 7970 will act as immediate resistance levels for the Markets. The supports come in at 7830 and then at 7750 levels.

The RSI—Relative Strength Index on the Daily Chart is 58.0870 and it remains neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD stays bearish as it still trades below its signal line.

On the derivative front, the NIFTY May futures have added over 6.09 lakh shares or 3.46% in Open Interest. The increase in Open Interest coming in with a up move clearly signifies addition of fresh long positions in the Markets.

Coming to pattern analysis, the Markets have established its existing range by first resisting multiple times near 7970 levels and then taking support for multiple time near its falling trend line pattern support around 7680 levels drawn from 8600 levels. The NIFTY has been oscillating in this broad trading range for past many days. In the meantime, it has crisscrossed its 200-DMA and it is attempting to move past that level. So long as the Markets are able to move past and stay above its 200-DMA, which is 7830 today, it will remain and trade with upward bias. Having said this, the resistance around 7970 levels remain and the Markets are likely to face resistance in that zone. However, with a tepid start expected today, the Markets are likely to see some consolidation around the 200-DMA.

Overall, the Markets are likely to see some consolidation around 200-DMA and until this happens we are also likely to see some sectoral performance shifts in the Markets. We might see some Energy, Bank, IT and Pharma stocks outperforming the overall Markets. However, this out-performance, irrespective of the sector will remain highly stock specific. So long as the Markets maintains above 200-DMA very selective purchases may be made maintaining cautious optimism in the Markets.

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 9, 2016

Daily Market Trend Guide -- Monday, May 09, 2016

MARKET TREND FOR MONDAY, MAY 09, 2016

The Markets are expected to open on a modestly positive note and we can expect some stability to return o the Markets. On Friday, the Markets took support from near the falling trend line which it had moved past in April. We can fairly expect the Markets to remain in a trading range with support of 7670 levels and upper resistance of its 200-DMA which stands at 7833 today. The Markets are likely to oscillate between this trading range. However, sustainable of possible positive opening would be critical and the intraday trajectory that the Markets form would be critical to watch out for.

For today, the levels of 7770 and 7820 would act as immediate resistance levels for the Markets. Supports come in at 7670 and 7620 levels.

The RSI—Relative Strength Index on the Daily Chart is 49.2620 and it remains neutral as it shows no bullish or bearish divergence or any failure swing. The Daily MACD stays bearish as it trades below its signal line. On the Candles, a bullish hammer is seen and this shows potential of the Markets stabilizing in the immediate short term. However, this requires confirmation today. On the Weekly Charts, the Weekly RSI is 50.5874 and this too remains neutral with no bullish or bearish divergence or any failure swings. The Weekly MACD stays bullish as it trades above its signal line.

On the derivative front, the NIFTY May futures have shed another 6.44 lakh shares or 3.53% in Open Interest. NIFTY has been consistently shedding OI since last couple of days.

Coming to pattern analysis, the Markets have breached its 200-DMA after oscillating in a 140-odd points range for a couple of days. On its way down, the Markets have taken support

on a falling trend line which is drawn from 8600 levels. This was a pattern resistance that the Markets breached on its upside. On the Weekly Chart as well, the Markets have taken support on a similar falling trendline pattern support. On the Daily Chart, the Markets have seen its 50-DMA cutting 100-DMA from below reporting a positive crossover. This may see some short term upside momentum in the Markets.

All and all, all given and said, there are fair chances of the Markets seeing some stability. This being said, the Markets still continues to remain in a no-trade zone. There will be no sustainable up move until the Markets breach its 200-DMA again in a comprehensive manner and stays above that. Though it will continue to oscillate in a given range with a difficult direction bias. Stock specific activities and purchases are likely to be seen with the profits being protected vigilantly at higher levels.