Gemstone Equity Research & Advisory Services

Tuesday, November 29, 2016

Daily Market Trend Guide -- Tuesday, November 29, 2016

MARKET TREND FOR TUESDAY, NOVEMBER 29, 2016

Though the Indian Equities recovered from its initial lows, it ended the day with modest gains while testing its 200-DMA intraday. Today, the analysis continues to remain more or less on similar lines. We might see subdued opening and the NIFTY will continue to resist to 200-DMA which is 8154 at Close levels and therefore, the behavior of NIFTY vis-à-vis this level of 200-DMA will be critical to watch out for. It would be critically important for the NIFTY to move past the 200-DMA and stay above that to mark and confirm reversal on the Chart.

For today, the levels of 8154 and 8230 will act as immediate resistance levels for today. The supports come in at 8050 and 7975 levels.

The RSI—Relative Strength Index on the Daily Chart is 39.9830 and it remains neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACDcontinues to remain bearish as it trades below its signal line. If no major downsides are seen and if we see some ranged consolidation, this indicator is moving towards reporting a positive crossover.

On derivative front, the NIFTY December futures have added over 6.04 lakh shares or 4.28% in Open Interest. This now vindicates our reading that short covering that was seen on Friday need to be replaced with fresh longs and this is what is been seen the Markets.

Coming to pattern analysis, the NIFTY has continued to show minor up tick after it formed a higher bottom on the Daily Close Charts. However, it still rules below 200-DMA and this level will continue to act as resistance at Close levels. Not only this, even if the NIFTY continues to trade with positive bias, this level is likely to cause the Markets to consolidate in a broad range. However, with all likelihood, the NIFTY has formed a near term bottom.

Overall, we continue to reiterate to avoid fresh shorts and utilize dips to make select purchases. In all likelihood, the NIFTY may consolidate in a broad range and is likely to trade with positive bias. However, for a pullback to sustain the NIFTY will have to move past 200-DMA and trade above that at close levels. Overall, while downsides may be utilized to make select purchases, IT and select Mid Caps will continue to outperform. Overall, volatility may remain but positive consolidation can be expected with upward bias.

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

Monday, November 28, 2016

Daily Market Trend Guide -- Monday, November 28, 2016

MARKET TREND FOR MONDAY, NOVEMBER 28, 2016

The NIFTY had a session with decent gains on Friday as it showed sustained wave of steady short covering while it ended near the high point of the day while temporarily marking an immediate bottom on the Daily Charts. Given the bottom to get confirmed, the levels of 7975-8010 will be critical pattern support to watch out for. Today, we might see a stable opening and NIFTY might show some positive bias to continue with its up move but its behavior vis-à-vis the levels of 200-DMA which is 8150 will be crucial to watch and is likely to act as resistance at Close levels. The NIFTY is still not completely out of the woods and its continuation of a pullback remains with certain caveats to watch for.

For today, the levels of 8150 and 8185 will act as immediate resistance levels. The supports come in at 8045 and 7980 levels.

The RSI—Relative Strength Index on the Daily Chart is 39.1721 and it has just crossed above 30 from a bottoming formation which is bullish. Otherwise it remains neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD still remains bearish while trading below its signal line.

On the derivative front, the NIFTY December futures have shed over 8.67 lakh shares or 5.78% in Open Interest. This makes it very much evident that the up move that we saw on Friday has been purely on account of short covering. It is necessary that this gets replaced with fresh buying in order to further fuel the pullback.

Coming to pattern analysis, the NIFTY, at closing levels, has formed an intermediate bottom at 7929 levels. It has formed a higher low at Close at 7965 and has moved on from there. If the current pullback continues, the immediate levels that we should look at would be 200-DMA which is 8150 today. It is important to note that even if we continue with the pullback, we would still remain in the current downtrend and reversal yet to get confirmed.

Overall, the coming days will remain interesting to watch for. The reason being, the NIFTY has shown a strong tendency to pullback but on the other hand, this has happened on account of heavy short covering. It would be important to see if this gets replaced with fresh buying otherwise, NIFTY will once again remain vulnerable to selling at higher levels. The moving past and sustaining above the 200-DMA will be crucial for the pullback to last and move towards confirmation on an immediate bottom.