Gemstone Equity Research & Advisory Services

Friday, July 29, 2016

Daily Market Trend Guide -- Friday, July 29, 2016

MARKET TREND FOR FRIDAY, JULY 29, 2016

The Markets had a buoyant end to the July series while it ended yet another day with gain fuelled global liquidity and positive sentiments. Today as well, as the country inches very near to GST becoming a reality, the Markets may open on a flat to mildly positive note and look for directions. Though the technicals clearly suggest that the Markets may consolidate at higher levels, immediate major downsides remain limited and the domestic factors are likely to provide positive cues to the markets.

For today, the levels of 8675 and 8720 will act as immediate resistance levels for the Markets. The supports come in at 8610 and 8565 levels.

The RSI—Relative Strength Index on the Daily Chart is 69.28 and it inches near to its overbought territory. The RSI does not show any failure swing but while NIFTY has formed a fresh 14-period high for the Markets, the RSI has not done so and this has resulted in Bearish Divergence on Daily Charts. The Daily MACD stays bullish as it trades above its signal line.

On the derivatives front, the NIFTY August series have added in net open interest. The NIFTY PCR has begun with 1.24 as compared to 1.08 and this remains bit on the higher side.

While having a look at the pattern analysis, the Markets have continued to remain in the upward rising channel and have been continuing to track the upper rising line of the said channel drawn from February lows. Having said this, it is much evident from the overall structure of the Charts that the Markets are being fuelled explicitly by the gush of global liquidity and while it continues to inch upwards, the corrections have been mainly in form of intraday dips or range bound consolidation. However, having said this, this very structure of the Markets continue to it itself vulnerable to intermittent bouts from higher levels.

Overall, the lead indicators persistently suggest signs of fatigue at higher levels. However, the Markets may not correct much and the corrections may remain limited to range bound consolidations and intermittent profit taking bound. It would be important to note that the Markets will continue to remain exposed to intraday volatility and out performance will remain limited to specific stocks. While keeping purchases limited and guarding profits at higher levels, cautious outlook is advised for the day.

Milan Vaishnav, CMT

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, July 28, 2016

Daily Market Trend Guide -- Thursday, July 28, 2016

MARKET TREND FOR THURSDAY, JULY 28, 2016

The Markets continued to heavily consolidate and ended the day with modest gains after coming off nearly 80-odd points from the high point of the day. Today, we are likely to see a flat opening again and the session will remain dominated heavily with rollovers as we enter the expiry of the current derivative series. The resistance zone of 8640-8660 continue to remain sacrosanct for the immediate short term.

For today, the levels of 8640 and 8660 will continue to act as immediate resistance levels for the Markets. The supports come in lower at 8590 and 8550 levels.

The RSI—Relative Strength Index on the Daily Chart is 66.6632 and it remains neutral as it shows no bullish or bearish divergence or any failure swing. The Daily MACD stays bullish as it trades above its signal line. However, this is moving towards reporting a possible negative crossover.

On the derivatives front, the NIFTY saw nearly 51% of rollovers taking place. The NIFTY July series shed over 27.58 lakh shares or 13.51% in Open Interest. The August series added over 47.57 lakh shares in Open Interest. The NIFTY PCR stands 1.07, unchanged from its previous levels.

Coming to pattern analysis, as mentioned in our previous edition, the Markets have so far failed to confirm a breakout on the upside post 8600 levels and there has been no confirming consistent up move. Having said this, it becomes important to reiterate that the Markets have been showing signs of fatigue on Daily Charts and despite the fact that the internals remain buoyant,, some amount of minor correction cannot be ruled out at higher levels. Presently, the Markets continue to remain in the broad rising channel drawn from February lows.

All and all, today being expiry of current series, the session is likely to remain heavily dominated with rollovers. Also, with the signs of fatigue showing up on daily charts, any up move will continue to remain vulnerable for a sharp intermittent selling bouts just like yesterday. We continue to reiterate to use all possible up moves in protecting profits and existing positions and keep fresh purchases highly selective and limited. Overall, cautious outlook is advised for today.