Gemstone Equity Research &amp; Advisory Services

+91-98250-16331

Thursday, July 11, 2013

Daily Market Trend Guide -- Thursday, July 11, 2013

MARKET REPORT July 11, 2013

What it seemed to be a stable session with some modest gains for the most part of the day, fizzled out in the second half as the Markets gave up to end the day with modest losses. The Markets opened on a modestly positive note in line with its Asian peers and gave its intraday high of 5879.35 in the very early minutes of the trade. The Markets came of a bit after that and continued to trade in 20-odd points capped range until half of the session moving in and out of negative territory. However, the Markets saw some pressure building in last one and half hour of the trade as the Markets suddenly pared its opening modest gains. It dipped into the negative again and went on to give the day’s low of 5802.85. It ended the day at 5816.70 after a modest recovery with a net loss of 42.30 points or 0.72% while forming a higher top and lower bottom on the Daily High Low Charts.

MARKET TREND FOR TODAY

Today, expect a strong and gap up opening in the Markets today and expect the Markets to open and trade near the upper levels of the trading range that it has been trading in. The opening levels are expected to be around its 50-DMA of 5917 today. It would be important to see the behaviour of the Markets post opening and the sustenance of the opening gains would be crucial to continue with trend reversal attempt after recent lows.

For today, the levels of 5915 and 5940 shall act as immediate resistance on the Daily Charts. The supports come in at 5835 and 5780 at Close levels.

The lead indicators continue to remain firmly in place. The RSI—Relative Strength Index on the Daily Chart is 49.66 and it is neutral as it shows no bullish or bearish divergences or any failure swings. The Daily MACD is bullish as it continues to trade above its signal line.

On the derivative front, NIFTY July futures have added 78,450 shares or nominal 0.51% in Open Interest. This if we look form one angle, suggest that though no major shorts were created yesterday, no long unwinding was done either. This is more of a neutral reading on the derivative front.

Overall, as mentioned in our yesterday’s edition of Daily Market Trend Guide, there is severe positive consolidation going on in the Markets after it pulled back over 300-odd points after making recent lows. This has made the Markets healthier and has set the stage of confirmation of successful trend reversal going ahead. After today’s strong opening, the Markets will have to sustain at those levels without paring much gain. It would need to capitalize on the strong opening that it is set to get. It will then set the stage of successful trend reversal going ahead.

All and all, with the strong and gap up opening expected, the Markets are moving towards breaking out of the broad trading range that it has been trading after the pullback from recent lows. Creating shorts, even at higher levels is not advised as the Markets prepares itself for possible trend reversal confirmation. Any profit at higher levels should be vigilantly protected and fresh purchases may be made selectively on any dips. Overall, positive outlook is advised for today.

Milan Vaishnav,

Consulting Technical Analyst,

+91-98250-16331

Wednesday, July 10, 2013

Daily Market Trend Guide -- Wednesday, July 10, 2013

MARKET RREPORT July 10, 2013

The Markets yesterday continued to trade in line with what was analysed in our yesterday’s edition of Daily Market Trend Guide. The Markets opened above its 200-DMA levels on back of positive opening and maintained the levels above 200-DMA for the entire session to end the day with decent gains. The Markets opened on a positive note and traded with decent gains in the morning trade, though in a capped range. During the second half of the session, the Markets did lose some ground as it came off its morning highs. However, last two hours of the session again saw the Markets going back towards its morning highs. It went on to give the day’s high of 5864.95. It finally ended the day at 5859, posting a decent gain of 47.45 points or 0.82% while forming a higher top and higher bottom on the Daily High Low Charts.

MARKET TREND FOR TODAY

The Markets have ended the day near the high point of the day and it is likely that the Markets shall open on a positive note and continue with its up move, at least in the initial session. Post pullback of over 300-points the market have been positively consolidating and is attempting a successful trend reversal with an positive bias.

For today, the levels of 5890 and 5920 which is the 50-DMA of the Markets are likely to act as immediate resistance for the Markets. The supports come in at 5830 and 5775 levels.

The lead indicators remain neutral to bullish. The RSI—Relative Strength Index on the Daily Chart is 52.4961 and it is neutral as it shows no bullish or bearish divergence or failure swings. The Daily MACD remains bullish as it continues to trade above its signal line. On the 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 has reported addition of over 5.38 lakh shares or over 3.63% in Open Interest. This is certainly a positive sign as fresh longs have been added yesterday with a rise and the rise is not just merely on account of short covering.

All and all, as mentioned earlier, the Markets have been positively consolidating after a pullback of over 300-odd points. In the last couple of sessions, the Markets have traded in a range of 70-80-odd points but have held on to its major support levels and consolidated with positive bias. This signifies that the markets are attempting a trend reversal after making recent lows and after pulling back over 300-odd points is now consolidating for a further up move.

However, the Markets will have to move past the levels of 5920-5930 levels for a fresh upward break out. Until this happens it would continue to trade in a range and would continue to positively consolidate. In such circumstances shorts should be strictly avoided and selective purchases can be made on dips while protecting profits at any levels. Overall, cautious optimism is advised for today.

Milan Vaishnav,

Consulting Technical Analyst,

+91-98250-16331

Tuesday, July 9, 2013

Daily Market Trend Guide -- Tuesday, July 09, 2013

MARKET REPORT July 09, 2013

So far as yesterday’s session goes, the Markets more or less traded in line with what was analysed in our yesterday’s edition of the Daily Market Trend Guide. The Markets saw lower opening in line with global weakness but came off its lows as the session progressed to close a notch below its 200-DMA. The Markets opened with a modest gap down along with its Asian peers but weakened further in the morning trade to give the day’s low of 5775.55. However, after this, the markets transformed itself into rising trajectory as it attempted to recover from its opening lows. The Markets kept recovering gradually from its lows during the day and managed to recover some half of its losses. It finally ended the day at 5811.55, still posting a net loss of 56.35 points or 0.96% while forming a lower top and lower bottom on the Daily High Low Charts.

MARKET TREND FOR TODAY

The Markets have closed a notch below its 200-DMA which is 5832.54 today. Expect the Markets to open on a modestly positive note and look for directions. The opening of the Markets would be around its 200-DMA or bit higher and it would be very critically important to see if the Markets remains above this level after opening. Intraday trajectory would be very important today and the behaviour of the Markets vis-à-vis the levels of 200-DMA would be critically important.

For today, the levels of 5832 and 5880 are immediate resistance levels on the Charts. The supports come in at 5790 and 5760 levels.

The RSI—Relative Strength Index on the Daily Charts is 49.4920 and it shows no bullish or bearish divergence or any failure swings and is therefore neutral. The Daily MACD continues to remain bullish as it trades above its signal line.

On the derivative front, the NIFTY July futures have shed over 7.96 lakh shares or 5.09% in Open Interest. This is little negative as we see that yesterday’s recovery from the day’s lows have come more from short covering than from fresh buying and there has been net unwinding of positions reported in the derivative segment. It would be important to see that with today’s positive move initially, these are replaced with fresh longs or not.

The overall observation is that the Markets have been consolidating in a range of 70-80-odd points in between its 50-DMA on the upper side and the 100 and 200 on the down side. And during such sessions, for the most of the time, the Markets have added in Open Interest and have recovered from its close below its 200-DMAs twice in the past. Today also, with its current closing a notch below 200-DMA, it would be important to see that it moves past this levels after opening and sustains above that level to avoid any further weakness creeping in.

All and all, the view is clear for the Markets today. It has to move past the levels of 200-DMA which is 5832 and trade above those levels if it has to avoid any further weakness creeping in. The chances of Markets doing this are higher as such. However, for this, the intraday trajectory and the behaviour of the Markets vis-à-vis these levels would be important. While avoiding shorts, trading are advised to remain light on overall positions until directional trend gets clear. Continuance of positive caution is advised.

Milan Vaishnav,

Consulting Technical Analyst,

+91-98250-16331