Gemstone Equity Research & Advisory Services

Thursday, October 9, 2014

Daily Market Trend Guide -- Friday, October 10, 2014

MARKET REPORT October 09, 2014

Breaking a losing streak of three days, the Markets staged a very smart pullback today and ended the day with decent gains. The Markets saw a better than expected opening and after opening on a positive and stronger note the Markets effortlessly maintained those opening gains in the first half of the session. Markets saw some further strength coming in the second half of the session as it perked up further and went on to form the day’s high of 7972.35. No significant pressure of any kind was seen even at higher levels as the Markets spent the final hour of the trade in sideways movement. It finally settled the day at 7960.55, posting a very decent gain of 117.85 points or 1.50% while forming a higher top and higher bottom on the Daily Bar Charts, though the volumes remained little lower for the day.

MARKET TREND FOR FRIDAY, OCTOBER 10, 2014

Since the Markets have ended near the high point of the day, we can expect the Markets to give a positive opening in the initial trade. However, in order to capitalize on the gains the Markets will have to surge ahead with good participation, i.e. volumes. The absence of enough participation would be a tool enough to keep the Markets in the broad trading range. Therefore, intraday trajectory, along with volumes would be critical to decide the trend for the immediate short term.

The levels of 7995 and 8055 would act as immediate resistance for the Markets. The support would come in lower at 7912 and 7820 levels.

The RSI—Relative Strength Index on the Daily Chart is 49.8354 and it is neutral as it shows no bullish or bearish divergence or failure swings. The Daily MACD still continues to remain bearish as it trades below its signal line.

On the derivative front, the NIFTY October futures have added nominal 96850 shares or 0.59% in Open Interest. The another way to interpret this figure would be to say that since there has been no reduction in Open Interest, the rise that was seen was not due to short covering and this increases the chances for the rise to percolate to the next day.

Examining the pattern on the Daily Charts, Markets are continuing to trade in broad 150+ points of trading range. On the lower side, the Markets have taken support at the 50-DMA levels and its filters and the trend support at 7815 levels. So long as Markets trades above these levels, broad consolidation would continue but some amount of volatility would continue to remain ingrained in the trade.

Overall, with Infosys coming out with numbers tomorrow, the IT pack would continue to witness volatile movement and Markets too, to some extent would react to this. Apart from this stock specific purchases and action would continue but as mentioned earlier volumes will have to be higher in order to have a sustainable and longer pullback. Overall, continuance of caution with very selective purchases is advised for the day.

Milan Vaishnav,

Consulting Technical Analyst,
Af. Member: Market Technicians Association (MTA), USA
Af. Member: Association of Technical Market Analysts, INDIA

www.MyMoneyPlant.co.in

http://milan-vaishnav.blogspot.com

+91-98250-16331

milanvaishnav@mymoneyplant.co.in

milanvaishnav@yahoo.com

Wednesday, October 8, 2014

Daily Market Trend Guide -- Thursday, October 09, 2014

MARKET REPORT October 08, 2014

Markets spent yet another session in a very capped and narrow range and ended the day with nominal losses while IT and Pharma shares took serious beating, especially IT shares after downgrade of Infosys. The Markets opened on absolutely flat note and after momentarily dipping into the red crawled back in the positive territory. It saw some selling pressure coming in which sent the Markets back in the negative territory. The Markets remained overall range bound but equally volatile while it tested its pattern support while forming day’s low of 7815.75. In the last hour of the trade, the Markets saw a sharp recovery from lower levels. It not only dragged itself in to the positive territory again but formed the day’s high of 7869.90. This recovery was pared again as the Markets came off and finally ended the day at 7842.70, posting a nominal loss of 9.70 points or 0.12% while forming a lower top and lower bottom on the Daily Bar Charts.

MARKET TREND FOR THURSDAY, OCTOBER 09, 2014

The Markets tested its pattern support levels of 7818 while it made its low of 7815.75 but has closed above that. The Markets are likely to open on a modestly positive note and trade positive in the initial trade. Though intraday trajectory would remain grossly important to decide the trend for the session, it would be critically important for the Markets to maintain levels above of 7815-7818 mark.

The levels of 7870 and 7920 would act as resistance. The supports are expected to come in at 7815-7818 and 7760 levels.

The RSI—Relative Strength Index on the Daily Chart is 39.8405 and it has reached its lowest value in last 14-days which is bearish. It does not show any bullish or bearish divergence as such. The Daily MACD remains bearish as it trades below its signal line.

On the derivative front, the NIFTY October futures have added 50,500 shares or nominal 0.31% in Open Interest. This signifies that though the Markets remained range bound and volatile, there was no unwinding of open positions seen.

Returning to pattern analysis, as mentioned in our previous edition, the Markets continue to remain in a broad formation. They have closed below the 50-DMA but are still within in filters and also trade above its neckline support. It would be critically important for the Markets to remain and trade above 7815-7818 levels. Any breach below these levels would induce further weakness in the Markets.

Overall, the advisory remains on similar lines that of yesterday. Though the Markets have not breached any serious support levels it is also not likely to see any runaway rise as well and the action would remain stock specific and limited with some sectoral out performance. Keeping this in view, selective purchases may be made but with continued caution and while avoiding any excess leverage. Continuance of positive caution is advised for the day.