Gemstone Equity Research & Advisory Services

Tuesday, July 5, 2016

Daily Market Trend Guide -- Tuesday, July 05, 2016

MARKET TREND FOR TUESDAY, JULY 05, 2016

The Markets posted its sixth day of gains yesterday and ended yet another day with gains. However, it has displayed some signs of impending weariness at higher levels. Today, we can expect the Markets to open on a modestly negative note and look for directions. We have a truncated week this time and we can fairly expect the Markets to trade in a capped range and consolidate at current levels which would be in turn, healthy for the Markets.

For today, 8395 and 8435 will act as immediate resistance levels for today. The supports come in lower at 8350 and 8305 levels.

The RSI—Relative Strength Index on the Daily Chart is 65.2047 and it has reached its highest levels in last 14-days which is bullish. It does not show any bullish or any bearish divergence. The Daily MACD has given a positive crossover and it is now bullish as it trades above its signal line.

On the derivative front, the NIFTY July futures have added over 3.24 lakh shares or 1.73% in Open Interest. The NIFTY PCR stands at 1.04 as against 0.98 yesterday.

Coming to pattern analysis, the Markets have not only managed to recover all of its losses post June 24^th but have also managed to deliver a breakout by moving past its previous intermediate top of 8298. Having said this, the Markets are currently back into the upper rising channel drawn from the lows of February. Given the fact that the Markets have posted gains for six straight sessions, it is very much likely that it sees some consolidation at higher levels. If it actually does, it would be, in fact healthy for the Markets. All lead indicators very clearly suggest that the uptrend in the Markets remains intact and the under current remains buoyant.

All and all, we are likely to see a modestly negative opening in the Markets today, the undercurrent continues to remain buoyant. In event of consolidation happening, we will see some sectoral rotation as well. It is best advised to avoid shorts and make selective purchases in the sectors that were lagging so far. While utilizing each up moves in protecting profits, cautious optimism is advised for the day.

Milan Vaishnav, CMT

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, July 4, 2016

Daily Market Trend Guide -- Monday, July 04, 2016

MARKET TREND FOR MONDAY, JULY 04. 2016

We draw your attention to our edition dated June 24^th, wherein we had categorically mentioned that though knee-jerk reaction to the Brexit would be inevitable, we will see the technical factors taking over and the Markets will see this as a huge buying opportunity. Today, five sessions later, the Markets have not only recovered those early losses but have ended above pre-brexit levels. Today, we are slated to see one more positive opening today and we will see the Markets touching fresh 2016 highs. However, given the current technical structure of the Markets, it would be important to see if the Markets maintain its expected opening levels.

For today, the levels of 8350 and 8410 will act as immediate resistance levels for the Markets. The supports come in at 8305 and 8245 levels.

The RSI—Relative Strength Index on the Daily Chart is 63.1134 and it has reached its highest value in last 14-days which is bullish. It does not show any bullish or bearish divergence. The Daily MACD is still bearish as it trades below its signal line.

On the derivative front, the NIFTY July futures have 3.29 lakh shares or 1.79% in Open Interest. This shows some more addition in long positions in the system.

Now coming to pattern analysis. The Markets have not only managed to recover all of its losses that it recorded on June 24^th, but has managed to move past its previous immediate top / resistance zone of 8285-8300 levels. It attempted a breakout on Friday as it moved past these levels and today as well, we will see the markets scaling fresh 2016 highs on back of expected positive opening. However, though we can certainly say that the logical target for the Markets can be 8550-8600 levels in the immediate short term if we extend the channel drawn from the February lows, some amount of consolidation or mild profit taking cannot be ruled out. However, if this happens, it would be in fact healthy for the Markets as its overall structure continues to remain buoyant.

Overall, after posting five days of straight gains, the Markets are slated for a positive opening once again. However, in the same breath, some amount of profit taking / consolidation at higher levels cannot be ruled out. In fact, if this happens it would be little healthy for the Markets in the immediate short term. It is advised to refrain from shorts as any profit taking if it is seen is likely to remain much capped and range bound as overall structure of the Markets continue to remain buoyant.