Gemstone Equity Research & Advisory Services

Thursday, September 22, 2016

Daily Market Trend Guide -- Thursday, September 22, 2016

MARKET TREND FOR THURSDAY, SEPTEMBER 22, 2016

We had mentioned about possibility of the Markets remaining choppy yesterday. Keeping in line with the analysis, the Indian Equity Markets had a volatile and choppy session while it ended on absolutely flat note after coming off nearly 50-odd points from the high point of the day. Today, we will see the Markets trading purely on technical parameters and some amount of fatigue remains evident on the Daily Charts. Though BoJ move on not reducing interest rates and making some adjustments in the stimulus remained a non-event, consolidation is likely to continue if we speak purely on technical terms.

For today, the levels of 8830 and 8865 will remain immediate resistance levels for today. The levels of 8730 and 8680 will remain immediate support for the markets.

The RSI—Relative Strength Index on the Daily Chart is 54.0819 and it remains neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD stays bearish trading below its signal line.

On the derivative front, the NIFTY September futures have added over 1.31 lakh shars or 0.41% in Open Interest.

Looking at pattern analysis makes one thing quite evident that the Markets have consolidated in a narrow range over last four sessions. It is also worth noting that after making an immediate top of 8968 on the Daily Charts and after showing 100% throwback to 8700-8730 zones from where the Markets broke out, the level of 8847 has become a lower top for the Markets. In other words, it would be critically important for the Markets to move past the level of 8850 to remain in sideways consolidation. Any failure to do so and any drift towards 8700 levels will see some short term negative bias.

Overall, Federal Reserve not rising rates has been largely discounted for. Any negative surprise of Fed rising the rate will certainly have negative effect. However, if the Fed keeps the rate unchanged as widely expected, we will see equity markets will see themselves being ruled purely by technical factors. Though sectors like IT, Metals and select Mid Caps will continue to out-perform, cautious view on the Markets is advised for today.

Milan Vaishnav, CMT

Technical Analyst

(Research Analyst, SEBI Reg. No. INH000003341)

Member:

Market Technicians Association, (MTA), USA

Canadian Society of Technical Analysts, (CSTA), CANADA

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, September 21, 2016

Daily Market Trend Guide -- Wednesday, September 21, 2016

MARKET TREND FOR WEDNESDAY, SEPTEMBER 21, 2016

Caution continued to weigh heavy on the domestic equity markets as the NIFTY remained under pressure and range bound on Tuesday while it ended the day with modest losses. Today as well, we continue to keep our analysis on similar lines. While the trade with see some reactions from the changes expected from the BoJ front, caution will prevail ahead of Federal Reserve which will decide on interest rate hike. Over 90% of the participants polled do not expect a hike. However, the session is likely to remain range bound and choppy.

For today, the levels of 8840 and 8895 will remain immediate resistance levels while supports will come in at 8730 and 8680 levels.

The RSI—Relative Strength Index on the Daily Chart is 53.9872 and it remains neutral showing no bullish or bearish divergence or any failure swings. The Daily MACD stays bearish trading below its signal line. An Engulfing Bearish Pattern has occurred on the Daily Charts. Since this has occurred during an pullback, it has a potential to halt the pullback briefly and cause the Markets to consolidate for some more time. However, this needs confirmation.

On the derivative front, the NIFTY September futures have shed over 1.23 lakh shares or 0.38% in Open Interest. This shows minor offloading / unwinding of long positions in the Markets.

Pattern analysis clearly depicts unsettled conviction of the participants on the Daily Charts. Even after receiving 100% throwback from the highs of 8968, the Markets have been indecisive while pulling back and during this process, the levels of 8730-8690 zone will continue to act as major pattern support. So long as the Markets trade above these levels, it will just consolidate. Any breach below this will bring in some weakness for the immediate short term.

Though some caution is clearly visible on the Charts, the global Markets have been trading around its medium term pattern support. With the fact that no rate hike is expected, lot of such developments seem discounted for in the current levels and we might see the up move resuming in coming days. However, as of now, with caution very clearly visible on the Daily Charts, we reiterate our positive but cautious view on the Markets. Though sectoral and individual stock out-performance will continue choppiness cannot be ruled out.