Gemstone Equity Research & Advisory Services

Friday, June 8, 2012

Daily Market Trend Guide -- Friday, June 08, 2012

MARKET TREND FOR TODAY June 8, 2012

Though with an intra-session reluctance, the Markets continue it up move for the fourth day in a row as it ended the day with extended gains. The Markets opened modestly positive and after trading with capped gains, pared most of its gains and at one moment traded modestly positive. It corrected itself intraday from the minor double top resistance but thereafter saw the recovery again in the second half of the session and went on to give its day’s high of 5059.65, just a few points from its 200-DMA, the level which it was expected to resist. It ended the day at 5049.65, posting a net gain of 52.55 points or 1.05%. It formed a higher top and higher bottom on the Daily High Low Charts.

The Markets are expected to open moderately lower and consolidate a bit after rising over 275 points from the day’s low on 4^th June, and it would not be a surprise if we see minor retracement. Further, the Markets have resisted precisely to the 200-DMA and there are chances that the Markets consolidates briefly around this level.

The levels of 5065 which is the 200-DMA and the level of 5092, which is the 50-DMA are likely to act as immediate resistance at Close levels. The levels of 5010 and 4965 are immediate supports on the Charts.

All lead indicators continue to remain in place. The RSI—Relative Strength Index on the Daily Chart is 56.0557 and it has reached its highest value in last 14-days, which is bullish. It does not show any negative or positive divergence. The Daily MACD continues to trade above its signal line and is bullish.

Having said this, the chances of the Markets consolidating or showing minor retracements cannot be ruled out. There are chances that the Markets consolidates again with the levels of 5065 and 5092 acting as resistance and thus, we may see some range bound movements and also a tinge of volatility returning to the Markets. It is important to note that these levels should be used for protecting profits but certainly not the opportunity for fresh shorts.

All and all, range bound session likely and some volatility is likely to be seen. Chances of consolidation are seen in the Markets and any downside should be utilized to make very selective purchases. Intermittent profit taking bouts cannot be ruled out. Existing profits should be protected at higher levels. Overall, cautious optimism 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

Thursday, June 7, 2012

Daily Market Trend Guide -- Thursday, June 07, 2012

MARKET TREND FOR TODAY June 7, 2012

The Markets had a thoroughly delightful session which was attributed to rate cut hopes on June 18^th as well as meeting of the PM with key officials but it was thoroughly supported by technicals as well. The Markets, though it continue to remain in the broad range mentioned by us in our yesterday’s edition but ended with robust gains. The Markets opened on a positive note and continued to trade with capped gains. Thereafter, in the second half of the session, the Markets strengthened further as it went on to give the day’s high of 5010.45. It finally ended the day near the high point of the day at 4997.10, posting a robust gain of 133.80 points or 2.75%. It has formed a sharply higher top and higher bottom on the Daily High Low charts with greater volumes.

The Markets have closed yesterday near the high point of the day and so technically speaking, they are expected to continue with their up move, at least in the initial session. Having said this, with global cues highly supportive, we are expected to see yet another gap up opening today and the Markets are expected to open between its 200-DMA and 50-DMA.

For today, the levels of 5064 (200 DMA) and 5096 (50 DMA) are immediate resistance on the Charts and the supports are likely at 4950 and 4925 levels.

The RSI—Relative Strength Index on the Daily Chart is 51.9313 and it has reached its highest value in last 14-days which is bullish. It does not show any negative or positive divergence.

Having said this, it is slightly important to note that the NIFTY has shed nominal Open Interest of 18,000 shares. This signifies a slight booking of profits at higher levels. The Stock futures have went on to add net open interest.

All and all, the opening of the Markets is likely to be above its 200-DMA and it would be critical to see the behavior of the Markets around those levels because, even with the yesterday’s rise, we are still within the broad range defined in our yesterday’s edition. So, intraday trajectory would be important and it is advised to use this perfect pullback to protect profits on existing positions as minor profit taking or consolidation cannot be ruled out. Fresh purchases may be made selectively. Positive outlook is advised for today.