Gemstone Equity Research & Advisory Services

Friday, December 2, 2016

Daily Market Trend Guide -- Friday, December 02, 2016

MARKET TREND FOR FRIDAY, DECEMBER 02, 2016

Much on the expected lines, the NIFTY halted its pullback and consolidated in while ending the day with modest losses. The Markets remained stable in the first half but NIFTY saw declines mainly led by corrective movements in banks, auto and telecom stocks. Today, we expect a stable opening to the Markets but the range bound consolidation is likely to continue with the levels of 200-DMA which is 8165 acting as immediate support. Overall, as indicated by various evidences, the consolidation in the Markets is likely to remain in a capped range and the overall bias continues to remain positive.

For today, the levels of 8250 and 8325 will act as immediate resistance levels for the Markets. The supports come in at 8165 and 8105 levels.

The RSI—Relative Strength Index on the Daily Chart is 44.6703 and it remains neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD remains bullish as it trades above its signal line. On the Candles, a black candle has occurred. This has no significance and it does not qualify to be a Dark Cloud Cover as the close of the current Candle is not below the midpoint between the opening and closing prices of the previous day.

On the derivative front, the NIFTY December futures have added yet another 5.01 lakh shares or 3.22% in Open Interest. This clearly shows some more addition of short positions in the system.

Coming to pattern analysis, the pullback that was seen in NIFTY since the lows of 7929 at Close levels has been expectedly halted as it has resisted to the previous support that it breached on the downside. It has halted at the return line (lower support line) of the falling channel that it has breached on the downside. It will need to move past the levels of 8225-8230 and stay above that to be back again to avoid any weakness once again in the short term.

Overall, the only spoilsport that the Markets may face is the US Bond yields not relenting and the Bonds continuing to show downward pressure despite oversold levels. This may cause the Markets to show some temporary weakness or a range bound consolidation which may be accompanied with volatility. Apart from this, if we individually examine the F&O Data, the evidences from the lead indicators and overall present structure, we feel that after some consolidation, the pullback may continue. We advice cautious optimism on the Markets and expect stock specific out-performance to continue.

Milan Vaishnav, CMT

Technical Analyst

(Research Analyst, SEBI Reg. No. INH000003341)

Member:

Market Technicians Association, (MTA), USA

Canadian Society of Technical Analysts, (CSTA), CANADA

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

Wednesday, November 30, 2016

Daily Market Trend Guide -- Thursday, December 01, 2016

MARKET TREND FOR THURSDAY, DECEMBER 01, 2016

After resisting to the200-DMA in the first half of the session, the NIFTY went on to move past it and ended the day with decent gains. As of present Close, the NIFTY has touched and ended a notch above the other pattern resistance of the return line (lower line of the falling Channel). However, in the process, the NIFTY has established and confirmed a near term bottom for itself and the levels of 200-DMA now should act as support in times of consolidation at higher levels. Today, we can fairly expect a stable start and expect the NIFTY to continue with its pullback at least in the initial trade.

For today, the levels of 8255 and 8310 will act as immediate resistance levels whereas the supports will come in at 8160 and 8105 levels.

The RSI—Relative Strength Index on the Daily Chart is 46.3382 and it has reached its highest value in last 14-days which is Bullish. Also, RSI has set a fresh 14-period high whereas NIFTY has not yet and this translates into Bullish Divergence. The Daily MACD is bullish as it trades above its signal line.

On the derivative front, the NIFTY December futures have added over 5.08 lakh shares or 3.37% in Open Interest. This clearly indicates addition of fresh longs in the system as the increase in NIFTY has resulted along with rise in Open Interest.

Coming to pattern analysis, the NIFTY has successfully pullback after establishing a immediate low of 7929 at Close. This level is likely to act as major support in future in event of any short term consolidation. Also, the NIFTY has managed to move past the 200-DMA which is 8161 and in event of any short term reactive downsides, this level should now act as Support. The NIFTY now currently tested the return line (lower support line of the falling channel) and has closed a notch above this. Overall, this reading, along with the F&O data and the lead indicators clearly indicates that apart from minor corrections and some consolidation, the bias remains on the positive side and the upticks are likely to continue.

All and all, though some amount of consolidation, like the one that happened in the first half of the previous session, the overall bias remains on the upside. Any short term reactive movements are likely to find support at 200-DMA while the levels of 7929 remains a short term bottom for the Markets. We continue to reiterate making purchases with each corrective movements and maintain a positive outlook on the Markets.