Gemstone Equity Research & Advisory Services

Monday, July 18, 2016

Daily Market Trend Guide -- Monday, July 18, 2016

MARKET TREND FOR MONDAY, JULY 18, 2016

The Markets consolidated on Friday after it retraced from the opening highs of the day to end the day with mild losses while remaining in range bound trajectory. Today’s analysis continues to remain on similar lines. The Markets are expected to see a quiet to positive opening and it is very much likely to see itself consolidating in a capped range while continuing to display inherent strength and buoyancy. It is likely to test its upper rising trend line resistance and it is also likely that the Markets continue to face corrective pressure at higher levels.

The levels of 8590 and 8625 will act as immediate resistance levels for today. The supports come in at 8510 and 8475 levels.

The RSI—Relative strength Index on the Daily Chart is 69.8871 and it has just crossed below a topping formation. It does not show any bullish or bearish divergence or failure swings. The Daily MACD stays bullish as it trades above its signal line.

On the derivative front, the NIFTY July futures have further added over 4.58 lakh shares or 2.08% in Open Interest. The NIFTY PCR stands at 1.06 as against 108 on Friday.

Coming to pattern analysis, the Markets have been displaying great amount of strength post its breakout from 8295 levels. After each rise, what we have been witnessing are just intraday corrective bouts and a range bound consolidation. The Markets continues to remain in a upward rising channel drawn from the February lows and it is expected that if the Markets continue to keep tracking its upward rising trend line, then the logical targets of 8600-8625 cannot be ruled out. However, at any given point of time, the Markets will continue to remain vulnerable to intraday selling bouts or ranged consolidation at higher levels.

Overall, the Markets have been driven by a tactical shift towards equity following sharp decline in bond yields abroad. Given the technical structure of the Charts, the Markets continue to remain vulnerable to selling bouts at higher levels but it continues to remain inherently strong and buoyant. Any decline should be used to make quality purchases. Sector specific out performance shall continue. Shorts should be avoided and cautious optimism is advised or 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

Friday, July 15, 2016

Daily Market Trend Guide -- Friday, July 15, 2016

MARKET TREND FOR FRIDAY, JULY 15, 2016

Global liquidity continued to fuel the Markets as after initial consolidation on a lower note, the Markets continued with its up move to end the day with modest gains. Today, speaking purely on technical grounds, the Markets are expected to continue with its up move, at least in the initial trade. Today, we can expect a quiet to modestly positive opening in the Markets once again. The Markets are likely to test its logical target levels of 8600-8610 as we had analyzed in one of our previous editions. However, given the pattern analysis, it would be critically important to see the behavior of the Markets at 8600-8625 zones.

For today, the levels of 8600 and 8625 will act as immediate resistance levels for the Markets. The supports come in lower at 8505 and 8460 levels.

The RSI—Relative Strength Index on the Daily Chart is 72.4695 and it has reached its highest level in 14-days which is bullish. However, it trades in “overbought” zone and it does not show any bullish or bearish divergence. The Daily MACD is bullish as it trades above its signal line. On the Candles, an engulfing bullish candle has occurred. Since this has occurred at the high point and after a good up move, this can act as a potential short term top for the Markets.

On the derivative front, the NIFTY July futures have went on to add yet another over 6.24 lakh shares or 2.91% in Open Interest. The NIFTY PCR stands at 1.08 as against 1.04 yesterday.

Coming to pattern analysis, the Markets have been rising sternly within the rising channel drawn from February lows. Post achieving breakout over 8295 and after couple of days of consolidation in between, the Markets have continued to display great inherent buoyancy. Having said this, as we had mentioned couple of times in our previous editions, the logical targets of this can be anywhere in the range of 8600-8625 levels. At these levels, the Markets would touch / test its logical pattern resistance levels. It would be important to see the behavior of the Markets at these levels.

Overall, today’s opening levels are expected to see the Markets being very near to its first pattern resistance levels of 8600. The Markets are “overbought” and they tend to remain overbought for some time in buoyant times. The current rally is being fuelled by global liquidity which has happened because of a tactical shift to equities happening after sharp decline in bond yields. However, all this certainly make the Markets buoyant but does continue to keep it vulnerable to sharp intraday selling / corrective bouts at higher levels. Though overall buoyancy is evident, some consolidation at higher levels cannot be ruled out.