Gemstone Equity Research & Advisory Services

Friday, November 18, 2016

Daily Market Trend Guide -- Friday, November 18, 2016

MARKET TREND FOR FRIDAY, NOVEMBER 18, 2016

The Indian Equities continued to remain “oversold” and once again traded much on analyzed lines. We had mentioned that there are chances of NIFTY continuing to remain oversold and still remain under pressure. The NIFTY ended yesterday with a modest loss and continued to trade below its 200-DMA as well. Today, we continue to keep our analysis on similar lines. Though we may witness a stable opening, the session will remain weighed down by domestic issues and the levels of 8070 will remain critical point to watch at Close levels.

For today, the levels of 8151 and 8195 will act as immediate resistance levels while supports will come in at 8070 and 8005 levels.

The RSI—Relative Strength Index on the Daily Chart is 26.7502 it has reached its lowest value in last 14-days which is bearish. It does not show any bullish or bearish divergence and it remains very much in “oversold “zone. The Daily MACD stays bearish as it trades below its signal line. On Candles, a long upper shadow occurred. It is important to note that this is not a classical long upper shadow as current upper shadow is little shorter than what is required, it can leads to potential bottom formation. But once again, it significant diminishes a bit as it is more effective trend reversal signal when it occurs during an uptrend which is not the present case.

On the derivative front, the NIFTY November futures have shed 99,600 or just 0.53% in Open Interest. This figure remains unchanged and therefore no significant creation of shorts or short covering was observed at current levels.

Coming to pattern analysis, the NIFTY has given a downward breakout from a falling channel drawn from 8968 levels. It is now important to note that post the negative breakout on the downside from the falling channel, the NIFTY has completed the measuring implications that arise from such negative breakout. Further to this, it continues to trade a notch below its 200-DMA but still remains within its 1% filter and at the same time remains heavily oversold.

All and all, given the oversold nature of the Markets and given the fact that the NIFTY PCR stands below 0.75 chances of a technical pullback cannot be ruled out even if we continue to remain in a continuing downtrend. However, as mentioned in the beginning, the session may still remain weighed down by domestic issues and we might see some volatile selling bouts but downsides will also remain protected. Overall continuance of a cautious approach with preservation of cash 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

Thursday, November 17, 2016

Daily Market Trend Guide -- Thursday, November 17, 2016

MARKET TREND FOR THURSDAY, NOVEMBER 17, 2016

The session turned out very much on analyzed lines yesterday. The NIFTY did attempted hard to find a base at current levels but at the same time remained highly volatile as it pared all of its opening gains to end the day on a flat note while still clinging on to its 200-DMA. Today’s our analysis continue to remain once again on similar lines. The NIFTY remains oversold; remains within the filter of 200-DMA, the NIFTY PCR remains well below 0.80 and all this indicate all possibilities of the NIFTY finding a bottom near current levels. However, domestic factors continue to weigh heavy and NIFTY is not out of the woods completely and still remains vulnerable to selling pressures.

Today, the levels of 8165 and 8225 will act as immediate resistance levels for today while the supports will exist at 8075 and 8005 levels.

The RSI—Relative Strength Index on the Daily Chart is 27.6941 and it remains neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD stays bearish as it continues to trade below its signal line.

On the derivative front, the NIFTY November futures have shed over 6.38 lakh shares or 3.27% in Open Interest. The coming off from opening highs with reduction in OI indicates some inherent weakness in the NIFTY.

Coming to pattern analysis, the current levels of NIFTY offer multiple supports. First, it trades within the filter of its 200-DMA and remains “oversold”. Further to this, the NIFTY PCR which is well below 0.80 indicates oversold status. On the Weekly Charts, it trades in between 50-WMA and 100-WMA and 8070 is one of the major pattern supports on the Weekly Charts. On the other hand, the NIFTY will continue to witness overweighing of domestic issues of demonetization, its resultant effect of consumption over next quarter, etc. It is important to note that the US10-YR Bonds may have bottomed out as indicated by technical indicators and resultantly, we will see Yields halting its up move. This may help equities to stabilize in the immediate short term.

All and all, as mentioned in our yesterday’s edition, a technical pullback is imminent given the oversold levels of the NIFTY. However, in the same breath, it is important to note that the NIFTY is not yet completely out of the woods. It is strongly advised to refrain from creating any fresh short positions. Dips may be utilized to make selective purchases but only when directional bias gets clearer and some signs of bottom formation are seen. Until that happens, cash preservation with cautiously positive outlook on the Markets is advised.