Gemstone Equity Research & Advisory Services

Sunday, February 1, 2015

Daily Market Trend Guide -- Monday, February 02, 2015

MARKET REPORT February 02, 2015

Markets traded precisely on dotted lines as analyzed in our previous editions of Daily Market Trend Guide as it finally saw much imminent correction from higher levels as the levels of 8985 held out as immediate top. The Markets saw a relatively quiet start and initially trade positive in the very early minutes of the trade while forming the day’s high of 8996.60. Since then, it transformed itself into falling trajectory and remained so throughout the session. It kept forming gradual lows during the day and in the second half of the session, the fall intensified a bit and the Markets went on to form the day’s low of 8775.10, coming off more than 200-odd points from the high point of the day. Very minor recovery was observed but it finally settled the day at 8808.90, posting a net loss of 143.45 points or 1.60% while forming a slightly higher top but sharply lower bottom on the Daily Bar Charts.

MARKET TREND FOR MONDAY, FEBRUARY 02, 2015

We may again see a quiet to subdued opening in the Markets. However, it is important to note that speaking purely on technical terms; the Markets are very likely to consolidate and drift lower or at least remain in a trading range. The level of 8985 has continued to act as a immediate top for the Markets and this level would continue to act as key resistance levels in coming days.

The levels of 8985-8995 would continue to act as key resistance level for the Markets. The supports would come in at 8690 and 8640 levels.

The RSI—Relative Strength Index on the Daily Chart is 64.9121 and it has just moved below its “oversold” area which is bearish. It does not show any bullish or bearish divergence or failure swing. The Daily MACD continues to remain bullish trading above its signal line. On Weekly Charts, the Weekly RSI is 69.4750 and like Daily Charts, this too has moved below from “oversold” area which is bearish. Also, this too remain neutral showing no bullish or bearish divergences or any failure swing. The Weekly MACD remains bullish trading above its signal line.

Coming to pattern analysis, the Markets have resisted to is quiet old rising trend line at 8985 levels. Though it did attempt to move past that level while making a high of 8996, it failed to do so. Therefore, this level of 8985 now continues to remain a immediate top for the Markets. It would be perfectly justified for the Markets to consolidate a bit more at this level. Even if it retraces near 8640 levels, it would be perfectly normal for the Markets to do so and there would be no structural breach on the Daily Charts. Until this happens, we will continue to see the Markets in a range bound consolidation.

While keeping the overall analysis on the same lines, we continue to reiterate to maintain adequate liquidity while keeping overall exposure moderate. While continuing to vigilantly protect profits at higher levels, we will also continue to see stock specific action. Therefore, while remaining highly selective, continuance of caution 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

Thursday, January 29, 2015

Daily Market Trend Guide -- Friday, January 30, 2015

MARKET REPORT January 30, 2015

The Markets had a session typically affected by rollovers though it continued to demonstrate strength as it consolidated at Close levels to end the day with modest gains. The Markets saw a negative opening formed its intraday low of 8861.25 in the morning trade. The overall trading range of the Markets remained wider as post such negative opening, the Markets spent rest of the session recovering from morning lows. The remaining session remained quite range bound but the final hour of the trade saw sharp up move in the Markets. The Markets not only shot up in the final hour of the trade but went on to form the intraday high of 8966.65. It finally settled the day at 8952.35, posting a modest gain of 38.05 points or 0.43% while forming a slightly lower top and lower bottom on the Daily Bar Charts.

MARKET TREND FOR FRIDAY, JANUARY 30, 2015

Though the Markets have shown consolidation at Close levels and have declined at all, still the analysis would continue to run on similar lines as that of yesterday. The Markets would see a quiet opening and the levels of 8985 would continue to act as immediate top. The Markets are trading “overbought” and this forces us to exercise caution even if the Markets continue to demonstrate liquidity driven strength.

The levels of 8985 would remain immediate resistance for the Markets. The supports would exist much lower at 8850 and 8775 levels.

The RSI—Relative Strength Index on the Daily Chart is 76.8426 and it has formed the fresh 14-day high with is bullish. However, it continues to trade in “overbought” zone. It does not show any bullish or bearish divergence. The Daily MACD remains bullish while trading above its signal line.

On the derivative front, the NIFTY saw in-line rollovers as compared to its 3-month average and so did the stock futures. NIFTY has continued to see net addition in Open Interest. However the overall Open Interest in the Derivative segment has crossed the Rs. 1 Trillion mark which certainly should prevent the market participants from throwing caution into the air.

Returning to pattern analysis, the Markets have continued to resist to the upper rising trend line and the levels of 8985 formed would continue to act as immediate top for the Markets. For any fresh up move to occur, the Markets will have to move past this level and while it does so, it will need good amount of conviction and volumes. IMPORTANTLY, if the Markets moves past this level while remaining “overbought”, the sustainability of such up move would be a matter of concern.

Overall, as mentioned, under the present technical structure of the Markets, any consolidation or minor correction, which looks imminent, would be very healthy for the Markets. It would lend sustainability and strength to the present up move that the Markets have seen. Under present circumstances, we continue to reiterate the view of vigilant protection of profits at higher levels. Fresh purchases should be restricted and made on selective basis.