Gemstone Equity Research & Advisory Services

Tuesday, June 28, 2016

Daily Market Trend Guide -- Tuesday, June 28, 2016

MARKET TREND FOR TUESDAY, JUNE 28, 2016

The Markets continued to trade in a capped range, much on expected lines yesterday and ended the day with minor gains. Today as well, we continue to keep our analysis on similar lines. The Markets are expected to open on a modestly negative to flat note and look for directions. It is expected to remain volatile but in a capped range and since it has broken out of the channel; it is likely to continue to resisting to the rising trend line drawn from the lows of February.

For today, the levels of 8130 and 8175 will continue to act as resistance levels for the Markets. The supports come in at 8040 and 7960 levels.

The RSI—Relative Strength Index on the Daily Chart is 48.9465 and it remains neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD stays bearish as it trades below its signal line.

On the derivative front, rollovers continued as the NIFTY June futures shed over 13.17 lakh shares or 9.81% in Open Interest. The July futures added over 22.87 lakh shares in OI. There was net OI addition and the NIFTY PCR stood at 1.04.

Coming to pattern analysis, as we mentioned in our yesterday’s edition, the Markets have breached the channel on the downside and therefore, the trend line drawn from the lows of February which was acting as pattern support is now likely to act as resistance. However, given the rising nature of the trend line, this potential resistance levels keeps rising every day. Further to this, it still remains important to note that the Markets continue to trade above all of its averages and therefore it remains structurally intact. There is no structural damage as yet and the lows of Friday, i.e. 7927 continue to remain sacrosanct as of now. Any breach below this level, which is not likely, will bring further weakness in the Markets.

Overall, though the Markets have not shown any structural breach, it is very much likely that it continues to see ranged volatility. This is more important when we have expiry lined up this week. We continue to reiterate our view of preserving more cash. With every dip, if any, limited purchases may be made. However, this may be kept very selective and sector specific. Overall, cautious optimism is advised for the day.

Milan Vaishnav, CMT

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, June 27, 2016

Daily Market Trend Guide -- Monday, June 27, 2016

MARKET TREND FOR MONDAY, JUNE 27, 2016

The Markets witnessed tremendous amount of volatility on Friday following Brexit and swung nearly 400-odd points and ended with losses even after recovering some 150-odd points from the lows of the day. Today as well, we are likely to see a negative opening once again and the Markets will continue to adjust itself with this very important global development. As mentioned in our previous edition, the Markets did go on to test the 50-DMA and the Friday’s low has now become a reference point for the immediate short term.

For today, the levels of 8125 and 8165 are immediate resistance points for the Markets. The supports exist at 8010 and 7925 levels.

The RSI—Relative Strength Index on the Daily Chart is 48.5207 and it has reached its lowest level in last 14-days which is bearish. It does not show any bearish or bullish divergence. The

Daily MACD is bearish as it continues to trade below its signal line.

On the derivative front, the NIFTY June futures have shed over 24.52 lakh shares or 15.43% in Open Interest.

Coming to pattern analysis, as we had mentioned in our Friday’s edition of Daily Market Trend Guide, the channel drawn from the lows that the Markets formed in February 2016 are now the immediate reference point for the Markets. The Markets have been trading while resisting to the upper line of this channel. The Friday’s trade would test the lower end and it happened exactly like that. Instead of taking support at the lower end, the Markets opened outside that rising channel and that line has not become immediate resistance for the Markets and the lows it formed are now the immediate support in the short term for the Markets. The levels of 50-DMA also coincides there and breach below that will induce some more weakness in the immediate short term.

Overall, lower opening is likely in the Markets once again but in the same breath, the Markets will also attempt to stabilize itself. While expecting the levels of 50-DMA and the Friday’s low as immediate support, the Markets may attempt to form base and these levels will be important to watch out for as any breach below this will induce further weakness in the Markets. Going ahead, liquidity should be preserved while adopting a cautious outlook on the Markets.