Gemstone Equity Research & Advisory Services

Friday, May 13, 2016

Daily Market Trend Guide -- Friday, May 13, 2016

MARKET TREND FOR FRIDAY, MAY 13, 2016

Today’s Market analysis remains more or less on similar lines that of yesterday. Today, following weak CPI and IIP data will cause the Markets to continue to remain in consolidation phase. Today, we can expect the Markets to open on a lower note and once again test levels around the 200-DMA of the Markets which stand at 7819. The behavior of the Markets in the zones of 7820-7850 will be critical to watch out for. However, if the Markets consolidate and maintain levels above 200-DMA, it would be healthy for the Markets in the long run.

Today, the levels of 7940 and 7975 will act as immediate resistance levels for the Markets. The supports come in at 7820 and 7775 levels.

The RSI—Relative Strength Index on the Daily Chart is 59.27, and it remains neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD remains bearish as it trades below its signal line. However, it continues to inch towards reporting a positive crossover in coming days.

On the derivative front, the NIFTY May futures have added over 3.23 lakh shares or 1.94% in Open Interest. This remains a healthy sign as the Markets have went on to add fresh long

positions in the Markets.

Coming to pattern analysis, the Markets have so far maintained itself above 200-DMA levels. So long as they maintain themselves above 200-DMA, it will continue to consolidate in a broad trading range of 200-DMA on the lower side and the upper intermediate resistance levels of 7970-7990. The Markets, in the immediate short term will continue to consolidate in this broad 170-odd points trading range. Any slip below the 200-DMA will induce some short term weakness in the Markets. However, this remains less likely and the Markets will see themselves oscillating in this broad trading range.

All and all, the approach of the Markets is likely to remain bottom up as fundamentally screened and technically strong stocks and sectors are likely to see selective purchases and out performance. Overall, we continue to reiterate our view on selective buying while maintaining strong vigil at every rise while avoiding shorts at any levels. Overall, cautious optimism should be continued in the Markets.

Milan Vaishnav,

Consulting Technical Analyst

Member: Market Technicians Association, (MTA), USA
Member: Association of Technical Market Analysts, (ATMA), INDIA

www.EquityResearch.asia

http://milan-vaishnav.blogspot.com

+91-98250-16331

milan.vaishnav@equityresearch.asia

milanvaishnav@yahoo.com

Thursday, May 12, 2016

Daily Market Trend Guide -- Thursday, May 12, 2016

MARKET TREND FOR THURSDAY, MAY 12, 2016

The Markets survived a Mauritian Treaty scare as it traded precisely on expected lines. Post gap down opening, at one point of time, it recovered its losses entirely and ended with modest losses. Today, we can expect the Markets to open on a flat to modestly negative note and look for direction. The Markets are expected to remain under consolidation with 200-DMA acting as support and this would be purely on technical grounds.

For today, the levels of 7890 and 7925 will act as immediate resistance levels for the Markets. The supports come in at 7820 and then at 7750 levels.

The RSI – Relative Strength Index on the Daily Chart is 56.11 and it continues to remain neutral without showing any bullish or bearish divergence or any failure swings. The Daily MACD stays bearish as it trades below its signal line. However, it is moving towards reporting a positive crossover.

On the derivative front, the NIFTY May futures have shed over 17.63 lakh shares or 9.54% in Open Interest. This figure is significant by any means and it shows heavy short covering from lower levels. The NIFTY PCR stands at 0.92, unchanged from its previous levels.

While having a look at Pattern Analysis, the Markets have its intermediate top / resistance levels at 7970-7990 zones. Unless that is cleared, we are not likely to see any sustainable fresh rally on the upside. However, even without this breakout, the overall trading range of the Markets remains much wide and this will see the Markets moving in a large band with the levels of 200-DMA acting as support and the levels of 7970-7990 acting as resistance. This translates into trading range of nearly 170-odd points and this means that will also see quite good amount of volatility remaining ingrained in it.

The Markets shall also react to the YOY Inflation rate and March IIP numbers coming in later today. The Markets will also react to that in coming sessions as well. Today, we can see the Markets moving in a capped range and we will witness the stock specific out-performance and very select purchases taking place. While avoiding shorts, such selective purchases may be made while remaining vigilant enough to protect profits at higher levels.