Gemstone Equity Research & Advisory Services

Friday, February 14, 2014

Daily Market Trend Guide -- Friday, February 14, 2014

MARKET REPORT February 14, 2014

The Markets had a thoroughly disappointing session yesterday as it ended the day with a significant cut following total lack of volumes and buying support. The Markets opened on a modestly positive note and initially it seemed that we will have a resilient session which would resist weak global cues. However, the Markets formed its intraday high of 6094.40 in the early morning trade and soon dipped into the red. The Markets thereafter formed a downward falling trajectory and remained so for the rest of the session while steadily forming fresh intraday lows. The Markets touched its final intraday low of 5991.10 in the final minutes of the trade. It saw a very minor recovery and managed to end the day at 6001.10, posting a net loss of 82.90 points or 1.36% while forming a lower top and sharply lower bottom on the Daily High Low Charts.

MARKET TREND FOR TODAY

The biggest solace in yesterday’s session what that the volumes across the board has remained lower than average. Taking this into account, and from relatively favourable global cues, we are expected to see a positive opening today. The Markets are expected to open on a positive note and decently hold on to its 200-DMA support. A technical pullback is likely today.

For today, the levels of 6050 and 6115 are immediate resistance on the Daily Chart. The support exists at 5980 at Close levels.

The lead indicators show resilience to the weakness and this is little positive. The RSI—Relative Strength Index on the Daily Chart is 35.8270 and it is neutral as it does not show any bullish or bearish divergence or any failure swing. The Daily MACD, though it continues to remain bearish as it trades below its signal line, is very much likely to report a positive crossover if the Markets do not breach any major supports.

On the derivative front, the NIFTY February futures have added over 11.30 lakh shares or massive 7.25% in Open Interest. This signifies that there has been addition of big shorts into the system.

Going by the pattern analysis, the Markets have not breached its major support of 200-DMA at close. Even if it pares all of its opening gains and dips below this level, this level is likely to continue to act as major support at Close. Further, given the shorts positions that exist in the Markets, there are high chances that the Markets finds supports at these levels.

All and all, we are likely to see respite from the weakness that we saw yesterday. There has been no structural breach on the Charts and given the pattern analysis and the F&O data, there are high chances of the Markets taking support at these levels again. It is strongly advised to maintain adequate liquidity and remain light on the positions while maintaining a positive outlook 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, February 13, 2014

Daily Market Trend Guide -- Thursday, February 13, 2014

MARKET REPORT February 13, 2014

The Markets inched upwards for the second day in a row but the session visibly remained dominated with caution and lack of conviction as the Markets grew cautious ahead of the December IIP and January CPI data that were slated to come after market hours yesterday. The Markets opened on a positive note and in the morning trade; gradually inched upwards to form the day’s high of 6106.60 in the late morning trade. However, the Markets saw some sluggishness returning and it formed a falling channel thereafter and spent the entire session in that trajectory. It came off from its day’s high but maintained modest gains. It finally ended the day at 6084, posting a net gain of 21.30 points or 0.35% while forming a higher top and higher bottom on the Daily High Low Charts.

MARKET TREND FOR TODAY

The December IIP data and the January CPI data that came in yesterday are more or less in line with the what the Markets expected though the December IIP contracted little bit more at -0.6% as against expectation of -0.1%. The Markets have overall discounted this data and no major reaction to this should be seen. The Markets will open again on a quiet note attempting for find direction. Absence of volumes and conviction are keeping Markets in this condition.

For today, the levels of 6110 and 6150 would act as immediate resistance for the Markets. The supports exist at 6070 and 6045 levels.

The lead indicators continue to remain in place. The RSI—Relative Strength Index on the Daily Chart is 43.3285 and it continues to remain neutral as it shows no bullish or bearish divergences or any failure swings. The Daily MACD continues to trade below its signal line but is moving towards a positive crossover.

On the derivative front, NIFTY February futures have shed over 3.87 lakh shares or 2.44% in Open Interest. This signifies some short covering in the Markets in yesterday’s session. This is likely to keep the Markets in the consolidation zone for some more time. It would be very important to see if this gets replaced with fresh buying.

The Markets have been inching upwards in past couple of session but the main concern that has remained in this pullback has been the lack of volumes. The low level participation on the days when the Markets are rising reflects the lack of directional bias and lack of consensus. Given this thing, it is likely that the Markets remains in consolidation for some more time. It has major resistance near 6150 levels in form of a pattern resistance as well as 100-DMA. To confirm the reversal of the trend, the Markets will have to move past the levels of 6150 with volumes and conviction.

All and all, while keeping the analysis on the similar lines, we continue to advice to refrain from creating aggressive positions on either side. While protection of profits would be extremely important, purchases may be done very selectively. It is advised to maintain adequate liquidity until the directional bias is achieved while maintaining a positive caution on the Markets.