Gemstone Equity Research & Advisory Services

Monday, April 16, 2012

Daily Market Trend Guide -- Monday, April 16, 2012

MARKET TREND FOR TODAY April 16, 2012

The Markets got a bad test of “Algorithmic Trading” as it saw a vertical 70-odd point slide in NIFTY as it saw basket selling by 2 FIIs on Friday following trivial news on mining, more than expected borrowing by Spain and grim monetary outlook. The question was not to the reaction of such news, but the manner in which the Markets saw totally unexpected basket selling dragged the otherwise positively consolidating Markets to its day’s low of 5185.40. The Markets had opened positive and had given day’s high of 5306.75 in the morning trade. Thereafter, it had traded flat after paring of morning gains on low volumes. The Markets saw a vertical slide of 70-odd points in just 25-seconds, faster than a human brain can comprehend. Following this “systemic abuse”, the Markets finally ended the day at 5207.45, posting a loss of 69.40 points or 1.32%. In the process, it has formed a higher top and higher bottom on the Daily High Low Charts. For week ending Friday, the Markets have ended the week with net loss of 115.45 points or 2.16%.

Today would be the crucial session for the Markets as the Markets shall be reacting to the Inflation numbers to be announced later today and also to the RBI Monetary Policy tomorrow. However, given the overall technicals of the Markets and its current status also read along with the F&O Data the Markets are less expected to see any serious downside – system abuses like that of Friday being excepted.

For today, expect the Markets to open on a moderately lower note. The intraday trajectory would be critical today also and it is likely that the Markets opens moderately lower and then improves as the levels of 5146, which is the 200-DMA and one of its major supports is in striking distance. Further, as of today, there is no structural breach / pattern breach on the Charts.

The RSI—Relative Strength Index on the Daily Charts is 44.8633 and it continues to remain neutral with no negative divergences or failure swings. The Daily MACD continues to trade below its signal line. RSI on the Weekly Chart is 50.2337 and that too is neutral with no negative divergence or failure swings and the Weekly MACD continues to trade bullish, above its signal line.

Further, it is important to note that if we co-relate Rupee’s movement on Friday, it did not depreciate further along with Market losses, which it should have otherwise, and in fact closed with minor gains. Secondly, NIFTY Futures have went on to add over 4 lakh shares in Open Interest indicating creation of shorts and not unwinding. Stock Futures also added in Net Open Interest.

The above is read along with the technicals on the Charts where the Pattern Analysis still shows the Markets continuing to remain in a broad range with no negative breach on the Charts.

All and all, having said this, there is no technical signal to suggest any bearish / negative breach on the Charts. The Markets trades above its critical support levels and any intermittent weakness should be used to make selective purchases. While avoiding shorts, stock specific, cautiously positive approach is advised for today.

Milan Vaishnav,

Consulting Technical Analyst,

www.MyMoneyPlant.co.in

http://milan-vaishnav.blogspot.com

+91-98250-16331

milanvaishnav@mymoneyplant.co.in

milanvaishnav@yahoo.com

Friday, April 13, 2012

Daily Market Trend Guide -- Friday, April 13, 2012

MARKET TREND FOR TODAY April 13, 2012

Markets ended the day yesterday with gains though it traded in a capped range but kept the underlying strength intact. The Markets opened on a positive note as expected and traded in the upper band of 30-odd points. Post opening in the green, the Markets gave its intraday high of 5290.60 in the early afternoon trade and spent the rest of the session in a capped range. It pared some of its gains in the afternoon, but again recovered and finally managed to end the day at 5276.85, posting decent gain of 50 points or 0.96%. In the process, it has formed a higher top and higher bottom on the Daily High Low charts.

Today’s session would important for the Markets as we are expected to see a decently positive opening in the Markets following strong technicals and favourable global cues. However, with the levels of opening expected, the Markets shall open near its one of the resistance levels and thus, it would be critically important for the Markets to see if it capitalizes on the strong opening and maintains its gains. For this, the intraday trajectory that it forms would continue to remain critically important.

For today, the levels of 5338, which is 50-DMA for the Markets and also a pattern resistance in form of a falling trend line would act as resistance and the levels of 5240 and 5205 shall act as immediate supports.

The RSI—Relative Strength Index on the Daily Chart is 49.4903 and it is neutral as it shows no negative divergence or failure swings. The Daily MACD still is bearish as it trades below its signal line, but likely to see a positive crossover if Markets continues with its up move.

Having said this, both NIFTY and Stock Futures have continued to add Open Interest. The NIFTY PCR stands as 1.17 as against 1.14.

Overall, as mentioned in previous editions of Daily Market Trend Guide, there has been no structural breach on the Charts and overall, the Markets are likely to continue with their up move as under current remains buoyant. However, for a sustainable up move to occur, the Markets will have to move past 5350 – 5410 levels and until this happens, the Markets will remain in broad trading range and thus make see volatile and range bound movements.

All and all, with trend remaining intact, it is strongly advised to avoid shorts even if some profit booking is seen as Markets remains in a broad trading range. Stock specific purchases may be made and profits should be continued to be vigilantly protected. Overall, positive outlook is advised for today.