Daily Market Trend Guide -- Monday, August 17, 2015

SEBI has come out with SEBI(Research Analysts) Regulations, 2014 {RA Regulations}. While complying with these regulations, we have completed all compliance at our end. Beginning today, i.e. Monday, August 17th, 2015 we shall be functioning with trade name "Gemstone Equity Research & Advisory Services". You would be receiving your Copy of Daily Market Trend Guide under this new name -- Gemstone Equity Research & Advisory Services".

MARKET REPORT                                                                               August 17, 2015

Markets survived a technical scare as few good news flows saved Markets from a potentially bearish technical formation. The Markets saw a positive opening and after trading with gains in the morning trade, strengthened further. The Markets saw a very strong and sharp upsurge and saw itself moving past the critically important 200-DMA as well. By doing this, it validated the levels of 100 and 50-DMA once again at Close levels. By afternoon, the Markets surged to form the day’s high at 8530.10. Positive news flows like stability of Yuan, better economic indicators/numbers, fringe hope for GST fuelled the sentiments. Markets maintained its levels and no signs of any profit taking were seen until the end of the session. The Markets finally ended the day at 8518.55, posting a robust gain of 162.70 points or 1.95% while forming a sharply higher top and higher bottom on the Daily Bar Charts.

MARKET TREND FOR MONDAY, AUGUST 17, 2015

As evident from the Daily Chart, Friday’s upsurge has prevented the Markets from a potentially bearish pattern and has sent it back into a broad trading range once again. Today, expect the Markets to open on a flat and quiet note and look for directions. It is expected to consolidate in a capped range with somewhat positive bias. It is , however, not fully out of the woods and will have to maintain itself above its 200-DMA in order to prevent any potential weakness.

For today, the levels of 8550 and 8610 will act as immediate resistance for the Markets. The level of 200-DMA, i.e. 8455 will have to act as important support in event of any consolidation once again.

The RSI—Relative Strength Index on the Daily Chart is 53.4304 and it remains neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD continues to remain bearish as it trades below its signal line. On the Weekly Charts, the Weekly RSI is 53.1480 and this too remains neutral as it shows no bullish or bearish divergence. The Weekly MACD is bullish as it trades above its signal line.

On the derivative front, NIFTY August futures have shed over 6.35 lakh shares or 4.05% in Open Interest. This clearly signifies that the upsurge that we saw on Friday has resulted into massive short covering. It would be imperative for the Markets to see fresh longs as well if it were to capitalize on this upsurge.

Coming to pattern analysis, the Markets have witness a fragile but potentially bearish Head and Shoulders formation on the Daily Charts. As we have mentioned often that this is not a classical formation but somewhat fragile, it can certainly have bearish implications. However, as of today and at this juncture, Markets have as of now survived this potential scare and has held on to all of its DMAs as support at Close levels. Markets trade above all of its DMAs and in event of any consolidation, the levels of 200-DMA is expected once again to act as major support.

Overall, the Markets are not completely out of the woods as Friday’s upsurge can be attributed to massive short covering. The Markets needs fresh purchases to capitalize on this upsurge. However, the Markets are expected to show resilience and somewhat buoyant bias in the trade but some consolidation once again cannot be ruled out. Fresh purchases may be made but profits too should be very vigilantly protected at higher levels as some amount of volatility at higher levels cannot be ruled out.

Milan Vaishnav,
Consulting Technical Analyst

Af. Member: Market Technicians Association, (MTA), USA
Af. Member: Association of Technical Market Analysts, (ATMA), INDIA
www.EquityResearch.asia
http://milan-vaishnav.blogspot.com

Consultant to:
www.MyMoneyPlant.co.in
+91-98250-16331
milan.vaishnav@equityresearch.asia
milanvaishnav@yahoo.com