Gemstone Equity Research & Advisory Services

Thursday, January 5, 2017

Daily Market Trend Guide -- Thursday, January 05, 2017

MARKET TREND FOR THURSDAY, JANUARY 05, 2017

Classical consolidation continued in the Indian Equities as the NIFTY remained in a very narrow range and ended the third day in a row on a flat note. It ended with marginal loss of 1.5 points or 0.02%. Today’s session is likely to remain on similar lines. We are likely to see a modestly positive start to the Markets and the analysis for today, therefore, remains on similar lines. The NIFTY has been resisting to its 50-DMA. Therefore, 50-DMA which stands at 8216 and 200-DMA which stands at 8271 remain critical levels to watch for in coming days.

For today, the levels of 8220 and 8270 will remain resistance levels for the NIFTY. The supports are likely to come in at 8135 and 8105 levels.

The RSI—Relative Strength Index on the Daily Chart is 54.0082 and this remains neutral as no bullish or bearish divergence are seen. It does not show any failure swings either. The Daily MACD is bullish as it trades above its signal line. On the Candles, no significant formations are seen.

On the derivative front, the NIFTY has added yet another 2.99 lakh shares or 1.74% in Open Interest. While the NIFTY is consolidating, it is adding net OI which is a positive sign.

The pattern analysis suggest a clear formation of the trading range post the Markets taking support in the 7900-7920 zones. It took support twice near these levels forming a Double

Bottom support and it now trades currently on the higher side of the established trading range. As of now, it trades below its 50-DMA and 200-DMA and until the NIFTY trades below this level, it is likely to remain under consolidation. For a fresh sustainable up move to occur, NIFTY will have to move past these important pattern resistances.

It is important to note that after the pullback of nearly 300-odd points, the NIFTY has not shown any retracement and is ending on a flat note at Close levels. This is clear indication of inherently positive bias in the Markets. However, until the Markets moves past the mentioned critical levels, we might see it continue to consolidate in broad range. However, the downsides will remain absolutely limited but some amount of volatility will remain ingrained. All lead indicators, F&O data and the current structure of the Charts point towards positive 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

www.EquityResearch.asia

http://milan-vaishnav.blogspot.com

+91-98250-16331

milan.vaishnav@equityresearch.asia

milanvaishnav@yahoo.com

Wednesday, January 4, 2017

Daily Market Trend Guide -- Wednesday, January 04, 2017

MARKET TREND FOR WEDNESDAY, JANUARY 04, 2017

Much as expected, the Indian Equities continued to consolidate on the Daily Charts and ended yet another day on a flat note ending with nominal gains of 12.75 points or 0.16%. The Markets continued to display inherent strength as it came off its intraday lows, while also resisted to its prescribed levels. Today, we once again expect a flat to positive start. At the same time, we still do not expect a runaway up move in the NIFTY and expect the consolidation to continue but with a positive bias. The level of 200-DMA which is 8268 today will remain the key level to watch out for. Until the NIFTY moves past this level, we will continue to see range bound consolidation in the Markets.

For today, the levels of 8220 and 8270 will act as immediate resistance levels for the Markets. The supports come in at 8150 and 8115 levels.

The RSI—Relative Strength Index on the Daily Chart is 54.1561 and it has reached its highest value in last 14-days which is bullish. It does not show any bullish or bearish divergence. The Daily MACD is bullish as it trades above its signal line. On the Candles, a spinning top has occurred. This indicates indecisiveness but at the same time, the overall pattern of the Charts exhibits some amount of healthy consolidation.

On the derivative front, the NIFTY January futures have added over 1.98 lakh shares or 1.17% in Open Interest.

If we have a look at pattern analysis, after forming a Double Bottom support in the zones of 7900-7920 levels, the NIFTY has formed a broad trading range with the levels of 8250-8275 zones acting as its upper pattern resistance. The zone of 8230-8270 also has 50-DMA and 200-DMA and both of these levels are likely to pose resistance at Close levels. Before we see any runaway rise, it would be critically important for the Markets to move past the 200-DMA. Until this happens, consolidation in a broad range will continue.

Overall, we should also note one important point that after a pullback of nearly 300-odd points, the NIFTY has not corrected at all at Close levels. While giving intraday swings, it has remained flat on Close levels. This is a clear sign of inherent strength in the Markets. Given the overall technical structure of the charts, reading the position and pattern of lead indicators, and taking some cues of F&O data, we can once again continue to fairly observe that though it may be a while before NIFTY gives a runaway rise, any consolidation will remain limited. Some consolidation might be there in form of intermittent downswings but inherent strength continues to remain intact.