Gemstone Equity Research & Advisory Services

Tuesday, July 12, 2016

Daily Market Trend Guide -- Tuesday, July 12, 2016

MARKET TREND FOR TUESDAY, JULY 12, 2016

The Markets staged a very sharp up move yesterday tracking stable and strong Global Markets and favorable technicals while it ended the day with robust gains after a brief consolidation over couple of days. Today, speaking purely on technical grounds, the Markets are likely to continue with its up move, at least in the initial trade. Today, we can fairly expect the Markets to open on a modestly positive note and continue with its up move in the initial trade. However, thereafter, given the very sharp rise, the Markets may again consolidate a bit at higher levels.

For today, the levels of 8480 and 8515 are immediate resistance levels for today. The supports come in at 8420 and 8380 levels.

The RSI—Relative Strength Index on the Daily Chart is 68.4194 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 bullish as it trades above its signal line. On the Candles, a rising window has occurred. This usually applies continuation of bullish trend.

On derivative front, the NIFTY July futures have over 16.78 lakh shares or 9.19% in Open Interest. This shows creation of fresh long positions and likely continuance of uptrend.

Coming to pattern analysis, the Markets showed a throwback to its breakout levels of 8295 zone after the initial breakout and while it consolidated for couple of days it has resumed its up move again and in the process moved past its previous high of 8398-8400 levels. Having said this, this very clearly implies that the inherent strength of the Markets remains intact and they continue to remain in overall up trend. However, given the sharp up move with gap yesterday, even if the Markets continue to show strength, some amount of minor consolidation again at higher levels cannot be ruled out. However, the Markets are likely to continue towards its logical targets of 8550-8600 levels.

Overall, it is more than evident that the Markets are currently in its upper rising channel with continuing up trend. However, given the sharp moves, it may show some minor consolidation again at higher levels even if it continues to edge higher. Also, some sector rotation would be seen this week and we will see some defensive sectors leading the Market performance and showing relative out performance. Overall, with inherent strength intact, positive outlook is advised for today.

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

Sunday, July 10, 2016

Daily Market Trend Guide -- Monday, July 11, 2016

MARKET TREND FOR MONDAY, JULY 11, 2016

The Markets continued to trade in the prescribed range on Friday and while it ended the day with modest losses, it did take support on the rising trend line drawn from February lows. Today, we can expect a positive opening in the Markets supported by stable global cues. However, with the Friday’s low acting as support, it would be important to see if the Markets are able to sustain and capitalize on expected positive opening. The levels of 8400 will continue to act as immediate top for the Markets.

For today, the levels of 8360 and 8400 will act as immediate resistance levels for the Markets. The supports come in at 8270 and 8230 levels.

The RSI—Relative Strength Index on the Daily Chart is 60.7842 and it is neutral as it shows no bullish or bearish divergence or any failure swing. The Daily MACD is bullish as it trades above its signal line. On the Weekly Charts, the Weekly RSI is 62.0798 and this too remains neutral as it shows no bullish or bearish divergence or any failure swings. The Weekly MACD is bullish as it continues to trade above its signal line.

On the derivative front, the NIFTY July futures have shed over 4.01 lakh shares or 2.15% in Open Interest. For the Markets to stage a possible continuation of uptrend, it needs to build up on fresh position.

On the pattern analysis front, the Markets have managed to keep themselves once again in the broad upward rising channel which is drawn from February lows. Having said this, as mentioned often in our previous editions, the Markets have managed to move past its previous top of 8298 and have given a fresh upward breakout. However, after forming an intermediate top of 8398 and rising nearly 400-odd points from the lows that it formed on June 24^th, it has been consolidating in a capped range and has taken support on the rising trend line drawn from February lows.

With a positive opening expected, we continue to reiterate that even if the Markets continue to consolidate, its inherent strength is quite evident and the undercurrent remains buoyant. Any consolidation or profit taking bouts that we witness should be utilized to make fresh purchases. However, we will continue to see sectoral out performance and some rotational shifts in the exposures is also likely to be witnessed. Overall, positive outlook is advised on the Markets today.