Gemstone Equity Research & Advisory Services

Friday, October 18, 2013

Daily Market Trend Guide -- Friday, October 18 2013

MARKET REPORT October 18, 2013

The Markets remained in the corrective mode yesterday, much on expected lines as it opened flat but gradually pared its gains during the day to end the day with losses. The Markets opened on a flat note and rose to 6110.75 in the morning trade which became its day’s high. The Markets pared those gains quickly and traded absolutely flat near its previous close in the entire afternoon session. It dipped further into the red to give the day’s low of 6032.55 in the last hour of the trade. The Markets did not sustain even a feeble attempt to recover and it finally ended the day at 6045.85, posting a net loss of 43.20 points or 0.71% while forming a lower top and lower bottom on the Daily High Low Charts.

MARKET TREND FOR TODAY

The resistance zone of 6130-6150 have so far held out as immediate top for the Markets and the Markets have failed to move past them. Today as well, the Markets are likely to give a modestly positive opening, however, the intraday trajectory would continue to remain critically important and the Markets are likely to continue to remain in the consolidation phase.

For today, the levels of 6130 and 6150 would continue to act as immediate resistance. The supports come in much lower at 5980 and 5945 levels.

The RSI—Relative Strength Index on the Daily Chart is 60.3845 and it is neutral as it shows no bullish or bearish divergence or any kind of failure swing. The Daily MACD continues to remain bullish as it trades above its signal line.

On the derivative front, NIFTY October futures has added 71,200 shares or nominal 0.37% in open interest. We can say that the OI figures have remain practically unchanged. This suggest that there was neither any unwinding of long positions nor any shorts were seen created.

Given the above reading, it can fairly be said that the Markets are under no directional consensus as of now and they very clearly appear to be in a broad trading range and in consolidation phase. The analysis remains more or less same as yesterday and the levels of 6130-6150 would continue to act as immediate top for the Markets.

Overall, it can very fairly be concluded that that with the levels of 6130-6150 acting as major resistance and immediate top, sustainable up move shall occur only above these levels. Until then, the Markets would continue to remain in a broad consolidating range with some amount of volatility ingrained in it. While protecting existing profits, Markets should be approached with caution and selective optimism.

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, October 17, 2013

Daily Market Trend Guide -- Thursday, October 17 2013

MARKET REPORT October 17, 2013

The Markets had a session wherein in heavily consolidated on Tuesday (yesterday being a trading holiday) and ended the day with minor losses after moving in both the directions. The Markets opened on a stronger and higher note, but as precisely expected in our Tuesday’s edition of Daily Market Trend Guide, it formed its day’s high of 6156.30 in the very early minutes of the trade. Immediately thereafter, it pared all of its gains in the morning trade itself to trade in the negative territory forming a day’s low of 6056.55 as it came off nearly 100-odd points from its opening highs. Thereafter, the Markets slowly crawled back and recovered its losses to trade flat. However, this was never sustained either and it slipped again into the negative territory. It finally ended the day at 6089.05, posting a net loss of 23.65 points or 0.39% while forming a higher top but lower bottom on the Daily High Low Charts.

Going by pattern analysis, the Markets have not been able to breach its immediate previous tops of 6130-6150 levels and these levels are likely to continue to act as immediate tops. Today, expect the Markets to open on a flat to modestly positive note and look for directions. To the most likelihood, it is shall continue to remain in consolidation phase and the levels mentioned would continue to act as resistance.

The levels of 6130 and 6155 would continue to act as immediate resistance on the Charts. The supports come in much lower at 3020 and 5975 levels.

The RSI—Relative Strength Index on the Daily Chart is 64.0789 and it is neutral as it shows no positive or negative divergence or any kind of failure swings. The Daily MACD continues to trade above its signal line. On the Candles, n engulfing bearish line occurred (where a black candle's real body completely contains the previous white candle's real body). The engulfing bearish pattern is bearish during an uptrend (which appears to be the case with NIFTY). It then signifies that the momentum may be shifting from the bulls to the bears.

On the derivative front, NIFTY October futures have over 9 lakh shares or 4.93% in Open Interest. This is the positive factor as there has been no unwinding of positions seen.

Given this reading, if we go by pattern analysis, the Markets are due for a minor correction as the levels of 6130-6150 have held out as immediate tops and would continue to pose immediate resistance for the Markets. However, given the derivative figures, the Markets would resist a downside as it has added in net open interest. However, given both of the readings, we can fairly conclude that the Markets are likely to see a range bound consolidation with a downward bias.

Overall, there shall be no immediate and sustainable up move in the Markets until they move past the levels of 6155. Until this happens, we may see the Markets consolidating with some amount of volatility ingrained in it. Any purchases that are made should be made on highly selective basis and shorts should be avoided. Overall, cautious outlook is continued on the Markets.