Gemstone Equity Research & Advisory Services

Tuesday, August 23, 2016

Daily Market Trend Guide -- Tuesday, August 23, 2016

MARKET TREND FOR TUESDAY, AUGUST 3, 2016

The Markets continued to correct yesterday much on expected lines while it ended the day with modest losses while making a lower high for itself. Today, we expect the Markets to continue to remain in corrective mode and also continue to consolidate while the mentioned levels will continue to act as immediate resistance for the Markets. While there is no structural breach on the Daily Charts, we expect the Markets to open flat with a slight negative bias and look for directions.

For today, the levels of 8680 and 8725 will act as immediate resistance levels for the Markets. The supports come in at 8605 and 8565 levels.

The RSI—Relative Strength Index on the Daily Chart is 54.8347 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, the NIFTY August futures have shed over 50.47 lakh shares or 21.75% in Open Interest while September futures added over 57.32 lakh shares or 110.55% in Open Interest as heavy rollover centric activity continued. The NIFTY PCR stands at 0.97 as against 1.06 yesterday.

Coming to pattern analysis, after forming an immediate top at the levels of 8728, the Markets have now turned sideways and have remained in consolidation stage for couple days now. Though the Markets have shown no structural damage or any major decline, the fatigue has once again become visible on the Charts. There will be no significant sustainable up move unless the Markets moves past the 8700-8728 resistance / congestion zone. However, at the same time, with the overall structure and long term trend remaining buoyant, the corrective activities are expected to remain limited to intermittent selling bouts and sideways range bound movements.

Overall, given the overall structure of the Markets, no major downsides are expected but at the same time it is very much likely that the Markets remain in corrective mode. It is important to note that with the inherent buoyancy, we continue to reiterate our view to avoid any major shorting in the Markets. Also, some fresh shorts positions are visible and this may aid the Markets at lower levels. Overall, continuing to use the dips to make selective purchases is advised while maintaining a positive caution on the Markets.

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, August 22, 2016

Daily Market Trend Guide -- Monday, August 22, 2016

MARKET TREND FOR MONDAY, AUGUST 22, 2016

The Markets continued to remain in consolidation mode and ended the day flat after a range bound move on Friday. Today as well, we are all likely to see the Markets remaining in consolidation mode once again. The Markets are likely to see a flat to mildly negative opening and likely to trade in a congestion zone created and the levels of 8700-8725 will continue to act as immediate resistance levels for the Markets. We also enter the expiry week of the current series and the Markets are likely to remain dominated with rollovers as well.

For today, the levels of 8680 and 8720 will act as immediate resistance levels for the Markets. The supports come in at 8620 and 8575 levels.

The RSI—Relative Strength Index on the Daily Chart is 58.5666 and it remains neutral as it shows no bullish or bearish divergence or failure swings. The Daily MACD is still bearish as it trades below its signal line. On the Weekly Charts, the Weekly RSI is 68.4710 and this too remains neutral as it shows no bullish or bearish divergence or any failure swings. The Weekly MACD continues to remain bullish as it trades above its signal line. On Candles, a Doji has occurred which continues to show a potential stoppage of up move that the Markets are witnessing over previous couple of weeks.

On the derivatives front, the NIFTY August futures have shed over 6.34 lakh shares in Open Interest. The September futures have added over 700,000 shares, indicating a net addition in Open Interest. The NIFTY PCR stands at 1.05 as against 1.06.

Coming to pattern analysis, the Markets have been trading in a narrow congestion zone after falling out of the rising channel drawn from the February lows. The Markets have been consolidating after forming a intermediate top at 8728 levels and the movement has turned sideways. However, in any case, though the Markets continue to remain inherently buoyant, the levels of 8728 have been a immediate top for the Markets. With the congestion zone, the Markets will not witness any significant up move until it moves past the 8700-8725 levels significantly.

Overall, nothing changes much for the analysis like the previous week as the Markets continue to remain in congestion zone. With the Markets remaining inherently buoyant, we do not recommend any major positional shorts in the Markets. However, though there is evident need to protecting profits at higher levels all dips should be utilized to make selective purchases.