Gemstone Equity Research & Advisory Services

Wednesday, September 14, 2016

Daily Market Trend Guide -- Wednesday, September 14, 2016

MARKET TREND FOR WEDNESDAY, SEPTEMBER 14, 2016

After suffering a gap down opening on Monday, the equity markets showed no signs of recovery and finally ended the day with a loss of 151.10 points. With the Monday’s session, the Markets have received a 100% throwback / retracement from the of 8700-8730 levels from where it had achieved a breakout on the upside. After losing 237 points in two sessions, we can expect the Markets to attempt and stabilize today. Though intraday trajectory would be critically important to watch out for, the behavior vis-à-vis the levels of 8700-8730 zone would be crucial to watch out for.

For today, the levels of 8700 and 8675 will be the important levels which are expected to act as supports. The resistance can be seen at 8745 and 8755 levels.

The RSI—Relative Strength Index on the Daily Chart is 50.4574 and it remains neutral as it shows no bullish or bearish divergence or any failure swings. Though the Daily MACD still remains bullish while trading above its signal line, it has reported a Bearish Divergence. A Falling Window, i.e. a gap created on the Candles may see the Markets struggling somewhat more at current levels. However, this needs confirmation on the following day.

On the derivative front, the NIFTY September futures have shed over 6.28 lakh shares or 1.88% in Open Interest clearly indicating offloading / unwinding of long positions.

Pattern analysis on the Daily Charts makes it evident that the Markets have seen 100% retracement / throwback back to 8700-8730 zone after breaking out on the upside couple of days back. This usually implies that we may see some stability returning to the equity markets but in the same breath, the levels of 8730-8700 would be critical to watch out for. Any breach below this level will see some more weakness creeping in.

All and all, though we cannot expect a outright pullback, we can certainly hope for some stability to return and for this, it would be important to see the NIFTY not breaching the 8700-mark. Some of the sector indices like CNXIT has shown potential bottom formation while forming a engulfing bullish candle and therefore we may continue to see outperformance in such stocks. Pharma and other select stocks may also see some outperformance. Overall, cautious outlook ahead for the Markets today.

Milan Vaishnav, CMT

Technical Analyst

(Research Analyst, SEBI Reg. No. INH000003341)

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, September 12, 2016

Daily Market Trend Guide -- Monday, September 12, 2016

MARKET TREND FOR MONDAY, SEPTEMBER 12, 2016

Given some contradictory technical signals on the Daily and Weekly Charts, we had mentioned in our Friday’s edition that some corrective intermittent selling bouts cannot be ruled out. Keeping in line with this analysis, the equity markets on Friday saw some corrective selling pressure while it ended with loss of 0.96%. Today, we will see such corrective activity continuing and the session is likely to remain in a given range with some corrective bias. We can expect to see the Markets opening on a mildly negative note and some amount of consolidation is likely to continue. The intraday trajectory that the Markets form will be critical to watch out for.

For today, the levels of 8890 and 8940 will act as immediate resistance levels and the supports will come in at 8830 and 8775 levels.

The RSI—Relative Strength Index on the Daily Chart is 62.5151 and it has once again moved below from a topping formation which is bearish. Beyond this, it remains neutral without showing any bullish or bearish divergence or any failure swings. The Daily MACD stays bullish as it continues to trade above its signal line. On the Weekly Charts, the Weekly RSI is 70.5763 and it has reached its highest value in last 14-periods which is bullish. Though it does not show any bullish or bearish divergence, it remains in “overbought” territory on Weekly basis. Weekly MACD remains bullish trading above its signal line. On the Weekly Charts, a Shooting Star on the Candles occurred which has capacity to form a potential top for the Markets in the immediate short term.

On the derivative front, the NIFTY September futures have shed over 9.12 lakh shares or 2.66% in Open Interest clearly indicating offloading of long positions.

Pattern analysis of the Markets clearly point towards some correction continuing in the Markets. On the Daily Charts, though we saw some corrective activities on the Friday, the Weekly Chart the lead indicators are overbought and the Candles show potential formation of a top for the immediate short term. All these indicate that the levels of 8968 have now become an immediate top for the Markets and any fresh up move shall occur only after this level is breached on the upside.

All and all, though we may see some mildly negative opening and some technical pullback as well later in the day, the overall state of the Markets will remain that of consolidation with the levels of 8775 and 8730 acting as very crucial supports. IT pack will continue to see some accumulation on the lower side and some sectoral outperformance will continue as well. Overall, cautious outlook is advised for the day.