Gemstone Equity Research & Advisory Services

Sunday, February 12, 2017

Daily Market Trend Guide -- Friday, February 10, 2017

MARKET TREND FOR FRIDAY, FEBRUARY 10, 2017

Very much on projected lines, the Indian Equity Markets played host to large amount of choppiness and volatility as it traded in oscillated in 100-odd points range on either side and ended the day nearly flat with nominal gain of 9.35 points or 0.11%. Today is going to be no better as the NIFTY50 is likely to remain choppy. Post the recent rise, instead of correcting at close levels, the NIFTY has seen flat endings with large amount of intraday volatility. Today, we can once again expect a tepid start to the Markets but the volatility is likely to persist and we will see NIFTY oscillating in a defined range with all possible downward pressures. The overbought nature of the Markets will prevent it from a giving a runaway rise.

For today, the levels of 8820 and 8875 will act as immediate resistance levels while supports will come in much lower at 8720 and 8665 levels.

The RSI—Relative Strength Index on the Daily Charts is 72.07.1 and despite remaining neutral showing no divergence on either side, it continues to remain in “overbought” territory. The Daily MACD bullish as it trades above its signal line. However, if the consolidation continues, it might move towards reporting a negative crossover. On the Candles, an engulfing line followed by a not-so-classical hanging man which had more resemblance to a long lower shadow has effective halted the up move for the moment.

The NIFTY February futures have remained virtually unchanged shedding just 7,275 shares or just 0.03% in Open Interest. This figure remains insignificant to draw any conclusion.

Pattern analysis vividly shows virtually no correction at Close levels. The Close over last couple of days has been nearly flat with minor gains or losses. The corrections so far have been shallow and the NIFTY has witnessed shallow oscillations. So far, the levels of 8820-8840 zones now become an immediate resistance zone. Any up move will occur only after the NIFTY moves past this level. Given the overbought nature of the Markets, any up move will sustain only if the Markets gives some healthy consolidation or minor correction before resuming its up move.

Overall, we continue to reiterate extremely cautious approach to the Markets. Stock specific performance will continue but the overall Markets in general will remain heavily vulnerable to selling pressures from higher levels. Volatile movements and selling pressures from higher levels will remain evident and therefore, heavy caution is advised with very vigilant protection of profits at higher levels.

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

Daily Market Trend Guide -- Thursday, February 09, 2017

MARKET TREND FOR THURSDAY, FEBRUARY 09, 2017

Markets headed nowhere and the benchmark NIFTY50 ended flat and virtually unchanged with nominal gains of 0.75 points or 0.01%. The Markets traded in a capped range with very narrow movement on either side for the most part of the day and in the second half reacted with extremely volatility to the RBI Monetary Policy Review which kept the rates unchanged and maintained the status quo. As anticipated by us, the Monetary Policy remained a non-event and the NIFTY remained broadly in a defined range. Today, we once again expect the Markets to see a tepid start and witness a ranged movement with intermittent downward pressures. While continuing to trade in overbought zone, NIFTY continues to remain vulnerable to profit taking at higher levels.

The levels of 8820 and 8910 will act as immediate resistance levels for the Markets. The supports come in much lower at 8710 and 8625.

The Relative Strength Index – RSI on the Daily Chart is 71.6313 and it does not show any bullish or bearish divergence or any failure swing and is therefore neutral. The Daily MACD remains bullish as it trades above its signal line but started to flatten its trajectory. On the Candles, a long lower shadow occurred. Apart a small upper body that this Candle contains, it also looks like a Hanging Man formation. Such formation after a engulfing line that occurred in the previous session increases the possibilities of the up move being halted manifold. However this needs confirmation.

The NIFTY February futures have added over 1.99 lakh shares or 0.93% in Open Interest. This figure, singularly, is not large enough to indicate any major shift in sentiments of the market participants.

Coming to pattern analysis, over last couple of days, the NIFTY has been chasing the fast widening Bollinger Band upper channel and while doing so, it has continued to trade in overbought zone. As mentioned often, the lead indicators are now currently overstretched and the overall structure of the Charts look like a greedy chase which is very fast getting unhealthy. Given the stable and buoyant structure on the Weekly Charts, the corrective dips on the Daily Chart look overdue and this would be healthy for the Markets while it prepares itself to move up again.

Overall, we do not see any runaway rise in the Markets soon. The upper levels of 8820-8840 will continue to resist the up move. Though sustainable up moves are not expected with the current structure of the Charts, any up moves should be vigilantly used to protect current profits and positions. In the given overbought scenario, individual stock specific performance will hold the key to successful participation in the Markets. We reiterate extremely cautious outlook on the Markets.