Gemstone Equity Research & Advisory Services

Thursday, July 19, 2012

Daily Market Trend Guide -- Thursday, July 19, 2012

MARKET TREND FOR TODAY July 19, 2012

The Markets have tried to find a bottom yesterday as it showed a smart recovery after lackluster opening and found support precisely at the levels mentioned in our past editions of Daily Market Trend Guide. The Markets opened on a flat note and after trading flat slipped a bit to trade in the negative. The Markets gave its intraday low of 5169.05 in the later morning trade. This was against the support levels of 5170 mentioned by us. The Markets saw smart recovery from those levels as it recovered again to trade flat. After moving in a range, it perked up further in the afternoon trade and went on to give the day’s high of 5222.85. It finally ended the day at 5216.30, posting a modest gain of 23.45 points or 0.45%. The Markets have formed a lower top and lower bottom on the Daily High Low charts.

For today, expect the Markets to give a decently positive opening on back of strong technicals supported by positive global cues. The Markets have ended the day near the high point of the day after taking support at critical support levels and today, it is expected to continue with that up move. The crucial point here would be to see if the Markets is able to capitalize on this positive opening and therefore, the intraday trajectory would be critically important today.

The levels of 5265 and 5310 are immediate resistance on the Charts and the levels of 5170 continue to remain critical support level.

The RSI—Relative Strength Index on the Daily Chart is 52.56 and it shows no negative divergence or failure swing. The Daily MACD continue to trade below its signal line. The NIFTY and Stock futures have continue to add Open Interest which indicates that apart from some short covering that was seen, fresh shorts too have been added.

As of now, the technicals indicate that the Markets have tried to inch ahead out of the consolidation range again and continuation of that up move is expected, at least in the initial session. The key would be able to capitalize on that and thus the importance intraday trajectory. While protecting profits at higher levels, selective purchases may be made. Overall, positive outlook 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

Tuesday, July 17, 2012

Daily Market Trend Guide -- Tuesday, July 17, 2012

MARKET TREND FOR TODAY July 17, 2012

Despite the lower than expected inflation numbers which came in at 7.25% for June as against 7.55% in May, the Markets remained in a range and it furthered its losses in the last hour of the trade to end the day with modest losses. The Markets opened on a moderately positive note and traded in a capped range. It dipped into the red in the late afternoon trade, but again recovered to trade in the green. However, the Markets continued to remain a capped range until late afternoon. The Markets extended its losses on lower volumes as it dipped into the red again and went on to give the day’s low of 5190.45. It finally ended the day at 5197.25, posting a moderate loss of 30 points or 0.57%. It has formed a lower top and lower bottom on the Daily High Low Charts.

The Markets are expected to open today on a decently positive note and trade positive at least in the initial trade. The intraday trajectory would be important to maintain and capitalize on the expected morning gains. Though the Markets ended negative yesterday, it is still in a broad range and above its critical support levels.

For today, the levels of 5220 and 5265 are immediate resistance on the Charts whereas the levels of 5190 and 5170 are important supports.

The lead indicators continue to point towards some weakness as RSI—Relative Strength Index on the Daily Chart is 50.5040 and it has reached its lowest value in last 14-days which is bearish. Also, the RSI has made a new 14-day low, but NIFTY has not yet, and this is bearish divergence. The Daily MACD remains bearish as it trades below its signal line.

Having said this, it is equally important to note that the NIFTY has added in Net Open Interest and so has stock futures. This implies that with the yesterday’s decline, there has been no unwinding in the Markets. Also important to note is that there is no structural breach on the Charts as the Markets continue to trade above its critical support levels of 5170-5160 levels. So long as the Markets trade above this levels, there is no negative breach on the Charts and no long lasting weakness can be expected. Also, NIFTY PCR stands at 1.17, leaving significant gap for the up side.

All and all, range bound movement expected again as the Markets trade in a range. We continue to advice to avoid shorts as there is no structural breach on the Charts. Also, aggressive longs are not advised as the Markets continue to remain in a range. It would be prudent to remain selective in purchases while protecting profits at higher levels. Overall, positive caution is advised for today.