Gemstone Equity Research & Advisory Services: 3/10/13

Tuesday, March 12, 2013

Daily Market Trend Guide -- Tuesday, March 12, 2013

MARKET TREND FOR TODAY March 12, 2013

The Markets traded perfectly in lines with what was analysed in yesterday’s edition of Daily Market Trend Guide. After a flat opening, it consolidated around its key resistance levels and finally ended the day absolutely flat with negligible losses. The Markets opened on a flat to moderately positive note and after briefly trading into the green, pared its morning gains to dip slightly into the negative. In the afternoon trade, the Markets perked up a bit to give the day’s high of 5971.20. However, volatility refused to go away and the Markets pared all of those intraday gains in the second half of the session. It pared those gains to dip into the red in the final minutes of the trade and ended the day at 5942.35, posting a negligible loss of 3.35 points or 0.06% still continuing to form a higher top and higher bottom on the Daily High Low charts.

Today is likely to be a similar trading session, and the Markets are expected to continue to consolidate but are likely to do so with positive bias. Expect the Markets to open on a mildly positive note and look for directions. The intraday trajectory would be important as the Markets consolidates and the levels mentioned yesterday shall continue to act as immediate resistance for the Markets.

For today, the levels of 5970 and 6010 shall act as immediate resistance. The levels of 50-DMA which is 5943.52 shall also act as resistance at Close levels.

The lead indicators are mildly positive. The RSI—Relative Strength Index on the Daily Charts is 57.1054 and it is neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD continues to remain bullish as it trades above its signal line.

On the derivative front, the NIFTY Futures have added over 1.05 lakh shares or 0.66% in Open Interest and the NIFTY PCR stands at 1.18 as against 1.15 yesterday.

The markets have shown a very typical signs of consolidation after a smart pullback. It may continue to do so today also but shall do it with positive bias. The F&O activity have shown strong put buying at lower levels indicating that in event of correction, it would be a mild one and those levels would act as support. In even of consolidation, the Markets may deliberate for a day or two and continue with its up move.

All and all, the Markets may react a bit to the IIP data coming out today, but the F&O data and the technicals clearly suggest the undercurrent to be buoyant. In event of mild correction or continuing consolidation, selective purchases may be made. While strictly avoiding shorts, any temporary downside should be utilized to make fresh purchases. Overall, positive outlook can be continued to be maintained.

Milan Vaishnav,

Consulting Technical Analyst,

www.MyMoneyPlant.co.in

http://milan-vaishnav.blogspot.com

+91-98250-16331

milanvaishnav@mymoneyplant.co.in

milanvaishnav@yahoo.com

Monday, March 11, 2013

Daily Market Trend Guide -- Monday, March 11, 2013

MARKET TREND FOR TODAY March 11, 2013

Markets staged a decent rally on Friday and ended the day with smart and decent gains for the fourth day in a row on back of favoring technicals and supporting global cues. On back of strong technicals and positive global cues, the Markets opened positive and on a fairly decent note and continued to trade with capped gains in the first half of the session. Further to this, it made an upward breakout from the intraday sideways trend and perked up further in the second half of the session. It went on to give the day’s high of 5952.85 in the final minutes of the trade. It hovered around those levels for a while and finally ended the day at 5945.70 posting a robust gain of 82.40 points or 1.41% while forming a sharply higher top and higher bottom on the Daily High Low Charts.

Today would be an important session for the Markets. We are likely to see a flat to mildly positive start to the Markets but at the same time, it is also likely to take some breather from the upward move that it has been witnessing. The pattern resistance levels and an moving average are likely to pose some resistance which can result into mild consolidation.

For today, the levels of 5930 and 5970 levels are likely to act as pattern resistance and the levels of 5945 shall act as resistance at Close levels in form of its 50-DMA.

The lead indicators are fairly bullish. The RSI—Relative Strength Index on the Daily Chart is 57.4704 and it has reached its highest value in last 14-days which is bullish. It does not show any bearish or bullish divergence. The Daily MACD is bullish as it now trades above its signal line. On Candles, A rising window occurred (where the top of the previous shadow is below the bottom of the current shadow). This usually implies a continuation of a bullish trend. There have been 5 rising windows in the last 50 candles--this makes the current rising window even more bullish.

On the derivative front, NIFTY Futures have shed over 4.53 lakh shares or 2.67% in net open interest. This shows some mild profit taking and also some short covering, especially in the up move that was seen in the second half of the session.

Having said this, it is important for the Markets to consolidate a bit before it prepares itself of a fresh up move. If the Markets mildly corrects / consolidates and then moves up again, it would then confirm a trend reversal from a mere pullback.

All and all, it is likely that the Markets briefly consolidates or mildly corrects after four days of rise. Any consolidation / mild correction would be healthy for the Markets as it would prepare itself for a fresh up move. Any up move that shall occur after a brief consolidation / mild correction will have all chances to result into and confirm a trend reversal. It is advised to guard profits in the immediate short term and use any short term consolidation to make selective purchases. Overall, positive outlook is continued to be advised.