Gemstone Equity Research & Advisory Services

Tuesday, January 10, 2017

Daily Market Trend Guide -- Tuesday, January 10, 2017

MARKET TREND FOR TUESDAY, JANUARY 10, 2017

Indian Equities headed nowhere today and traded in a very narrow 25-odd point intraday range while ending the day with marginal loss of 7.75 points or 0.09%. We had mentioned in our yesterday’s edition that NIFTY is expected to consolidate and it traded very much on expected lines. Today is likely to be no different. Though we once again expect a quiet start to the Markets, we expect the Markets to consolidate and expect NIFTY to remain in a narrow trading range with the levels of 200-DMA which stand at 8282 today continuing to act as important resistance at Close levels. Just like in the previous sessions, the NIFTY consolidating near the resistance area is a sign of positive consolidation and it makes very much evident the fact that the underlying buoyancy in expected to remain intact in the immediate short term. As expected, CNXIT consolidated its performance and out-performed in the yesterday’s session.

For today, the levels of 8280 and 8335 will act as immediate resistance levels for the Markets. The supports will come in at 8195 and 8150 levels.

The RSI—Relative Strength Index on the Daily Chart is 56.2326 and it continues to remain neutral. It does not show any bullish or bearish divergence or any failure swings. The Daily MACD remains bullish as it trades above its signal line. On the Candles, no significant formations are observed.

On the derivative front, the NIFTY January futures have shed 19,500 shares or just 0.10% in Open Interest. This figure does not signify and major change in underlying sentiment.

While having a look at pattern analysis, it becomes evident that the NIFTY is resisting at the upper end of the broad trading range that it has formed. This range is in form of a rectangle formed after the NIFTY took support in the 7900-7920 zones and subsequently forming a Double Bottom support. Another key area of resistance just near this upper end of the range is the convergence of the 200-DMA which stands at 8282 today. This level will continue to act as area resistance to the NIFTY at Close levels. The current Bollinger Bands are 11.99 % narrower than normal and they individually do not suggest anything conclusive about the future volatility.

All of the above suggest that we might see some more consolidation in the given range today. We might see the levels of 50-DMA which is 8194 acting as support to the NIFTY at Close levels. Runaway rally, as also mentioned in our yesterday’s edition, is not expected until the NIFTY moves past and closes above 200-DMA. Consolidation is expected, which is likely to be in form of range bound movement coupled with some amount of volatility and intermittent bouts. Sector churning will be evident and some select stocks will out-perform. We advise highly stock specific and selective approach to the Markets 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

www.EquityResearch.asia

http://milan-vaishnav.blogspot.com

+91-98250-16331

milan.vaishnav@equityresearch.asia

milanvaishnav@yahoo.com

Monday, January 9, 2017

Daily Market Trend Guide -- Monday, January 09, 2017

MARKET TREND FOR MONDAY, JANUARY 09, 2017

In our Friday’s edition, we had mentioned theoretical chances of the NIFTY consolidating as it was yet to move past and Close above the 200-DMA. NIFTY on Friday consolidated as it did came off from its opening lines and ended the day with a modest cut of 30 points or 0.36%. Tomorrow, we expect a quiet start to the Markets. We may see a overall stable opening but we do not expect the NIFTY to give a run-away rise. We may see some more ranged movement and consolidation. Markets will set to react to some macro numbers like WPI Inflation, November IIP, etc., and also to third quarter results like that of TCS, INFY, etc. in days to come. Overall, speaking purely on technical note, the levels of 200-DMA, i.e. 8279 will remain important levels to watch out for.

For today, the levels of 8280 and 8335 will act as important resistance levels. The supports will come in at 8210 and 8165 levels.

The RSI—Relative Strength Index on the Daily Chart is 56.9437 and it remains neutral showing no bullish or bearish divergence or any failure swings. The Daily MACD stays firmly bullish as it trades above its signal line. On Candles, no significant formation has been observed.

On the derivative front, the NIFTY January futures have shed 46,500 shares or nominal 0.25% in Open Interest. This figure is negligible enough not to draw any conclusions regarding any possible change in sentiment.

While we have a look at pattern analysis, two things remain clearly visible. First, the NIFTY has put the support firmly in place at 7900-7920 zones. Though it has not confirmed any reversal, it certainly has established these levels as its immediate short term support. Second, the NIFTY has formed a broad rectangle type trading range with the higher levels at 8275. Currently, the NIFTY trades near the upper range of this broad trading range. At these levels, it is encountering multiple pattern resistance. First this upper end of the trading range itself is likely to act as resistance and second; the levels of 200-DMA also converge in this area. Both of these factors are likely to create short term resistance levels for the

Markets.

Overall, given the above factors, it is very much likely that the NIFTY continues to show some consolidation in the immediate short term. Corrections, if any, are likely to remain in the form of intermittent profit taking bouts. For the NIFTY to resume a sustainable rally, it would be of paramount importance for the NIFTY to move past and Close above the 200-DMA. Until this happens, we expect the NIFTY to remain in a broad trading range. While avoiding major shorts, we continue to advice making modest purchases in any corrective dips.