Gemstone Equity Research & Advisory Services

Thursday, July 21, 2016

Daily Market Trend Guide -- Thursday, July 21, 2016

MARKET TREND FOR THURSDAY, JULY 21, 2016

The Markets have attempted to resume its up move by moving towards upper end of its consolidation band yesterday as it ended the day with modest gains. However, it has not yet shown any break-out from that narrow consolidation zone and it continues to remain within that. Today, we can expect the Markets to open on a flat note and continue to consolidate with the levels of 8600 and 8625 continuing to act as immediate resistance levels. The Markets are nearly overbought once again and any sharp up move will make it overbought again.

Today, the levels of 8600 and 8625 will act as immediate resistance levels for the Markets. The supports come in at 8515 and 8470 levels.

The RSI—Relative Strength Index on the Daily Chart is 69.4113 and it does not show any failure swing. However, NIFTY has formed a fresh 14-day high but RSI has not and this is Bearish Divergence. The Daily MACD stays bullish as it continues to trade above its signal line.

On the derivative front, NIFTY July futures have added yet another over 6.21 lakh shares or 2.71% in Open Interest. This makes it very much evident that we have seen fresh long positions being initiated once again in this segment.

Coming to pattern analysis, the Markets have continued to show up move but it has remained within the narrow range in which it has been consolidating. The Markets have been consolidating with the levels of 8600-8610 acting as resistance on the upper side. With the Markets tracking the rising trend line of the channel it has formed from February lows, any fresh up moves or attempts to break out of the consolidation zone will see the Markets testing its logical targets of 8630-8645 levels. However, it will be overbought once again and it would be a while before we see a longer sustainable rally even if the undercurrent remains buoyant.

Taking into account that the lead indicators have shown very mild signs of weariness again, the Markets may show up moves but will continue to remain vulnerable to sharp selling bouts as it has been in the past. Before a fresh sustainable breakout is seen, we will continue to see some good amount of volatility remaining ingrained in the Markets. We continue to reiterate to avoid major shorts positions, preserve cash and keep fresh purchases highly stock specific.

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

Wednesday, July 20, 2016

Daily Market Trend Guide -- Wednesday, July 20, 2016

MARKET TREND FOR WEDNESDAY, JULY 20, 2016

Markets displayed great amount of volatility and strength as well as it see-sawed nearly 100-odd points intraday to finally end with modest gains. Today, Markets are expected to see a flat to modestly positive opening and look for directions. It is most likely that the Markets will continue to consolidate and some amount of volatility will continue to remain ingrained and therefore, it keeps analysis for today once again on similar lines like yesterday.

The levels of 8575 and 8625 will act as immediate resistance levels for the Markets today. The supports come in at 8475 and 8430 levels.

The RSI—Relative Strength Index on the Daily Chart is 67.4335 and it remains neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD stays bullish as it continues to trade above its signal line.

On the derivative front, the NIFTY July futures have added over 5.19 lakh shares or 2.32% in Open Interest. The NIFTY PCR stands at 1.03 as against 1.06 yesterday.

Coming to pattern analysis, the Markets have been consolidating after it moved upwards post breaking out above 8295 levels. It has been seeing a range bound consolidation since last couple of days but at the same time, the Markets have displayed good amount of resilience at higher levels. The levels of 8600-8610 have now become a intermediate top for the Markets and fresh rally would occur only after the Markets move past these levels. Until this happens, we will see the Markets oscillating in a capped range. However, the downsides would be limited as inherent strength continues to remain intact.

Overall, the underlying buoyancy in the Markets remains intact. The Markets may not see a runaway rally immediately but the resilience will continue to show and the downsides would be limited. In form of corrections, we might witness some limited downsides and volatile intraday movements. While refraining from shorts all downsides should be utilized to make selective purchases as sector rotation is much evident in the Markets and stock specific out-performance will continue.