Gemstone Equity Research & Advisory Services: 7/26/15

Friday, July 31, 2015

Daily Market Trend Guide -- Friday, July 31, 2015

MARKET REPORT July 31, 2015

The Markets remained positive on its expiry day of the July series and held on to its important support at Close levels while ending the day with modest gains. The Markets saw itself opening above its both 100-DMA and 200-DMA and remained above those levels for the rest of the session. After opening on a better note, the Markets strengthened further and went on to form the day’s high of 8458.90 by afternoon trade. However, the second half of session saw some volatility creeping in on account of rollovers. The Markets came off from its highs and pared nearly half of its gains. The second half of the session was spent in a sideways manner and the Markets finally ended the day at 8421.80, posting a net gain of 46.75 points or 0.56% while forming a higher top and higher bottom on the Daily Bar Charts.

MARKET TREND FOR FRIDAY, JULY 31, 2015

Expect the Market to open today on a flat to mildly positive note and continue with its up move. The July series have ended on a positive note and it is likely that the Markets continue with it pullback at least in the initial trade. The Markets are once again above all of its DMAs and it would be important to see that the Markets trades above these levels in order to avoid any temporary weakness from creeping in.

For today, the levels of 8460 and 8510 will act as immediate resistance levels for the Markets. The supports come in at 8400 and 8340 levels.

The RSI—Relative Strength Index on the Daily Charts is 49.2633 and it remains neutral as it shows no bullish or bearish divergences or any failure swings. The Daily MACD continues to remain bearish as it trades below its signal line.

On the derivative front, rollovers remain in line wit the 3-month average in NIFTY and stocks alike. The NIFTY August series added over 39.87 lakh shares or 31.60% in Open Interest. The NIFTY PCR for August series stands at 0.85.

Coming to pattern analysis, the Markets have breached its lower support trend line of the channel that it had formed after making lows at 8000-levels. Having said this, though the Markets have managed to hang on to all of its DMAs at Close levels, this very same trend line which is breached on the downside is likely to act as resistance going ahead. Though the Markets may continue with its pullback, this pattern is likely to pose resistance around 8500-8550 levels. It would be imperative for the Markets to move past these levels otherwise we will again see the interruption in the uptrend around these levels.

Overall, the Markets may open with mild gains and continue it uptrend at least in the initial session and we will also continue to see selective stock and sector out performance. The levels of 8400 would be an important support and its breach can see the Markets going to 8340 levels. The behaviour of the Markets vis-à-vis the levels of 8400-levels would be crucial to watch out for. Select purchases may be made with high vigilance over protection of profits at higher levels.

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

Thursday, July 30, 2015

Daily Market Trend Guide -- Thursday, July 30, 2015

MARKET REPORT July 30, 2015

The Markets had a day of positive consolidation amidst lower volumes as it ended the day with modest gains after a range bound session. The Markets saw a better than expected positive opening but spent the first half of the session in a very narrow 20-odd points range heading nowhere. It was in the second half that the Markets saw some more strength coming in as it surged and formed its day’s high of 8381.50. The Markets soon pared this gain and traded in a directionless trajectory with modest gains. The last hour of the trade once again saw some strength and the Markets finally ended the day at 8375.05, posting a modest gain of 38.05 points or 0.46% while forming a lower top but higher bottom on the Daily Bar Charts.

MARKET TREND FOR THURSDAY, JULY 30, 2015

Markets continue to pose itself at a critical juncture. Expect the Markets to open on a modestly positive note and look for directions. Most likely, the Markets will continue with their recovery initiated in the last hour of the trade yesterday. The positive sentiment would be aided by slightly improved technical factors and also good global cues which are aided by the Fed Reserve keeping the rates expectedly unchanged.

For today, the levels of 8400-8420 range, which is the 100 and 200DMA for the Markets, will act as immediate resistance. The supports would come in at 50-DMA at 8340 and then at 8300 levels.

The RSI—Relative Strength Index on the Daily Chart is 46.1240 and it remains neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD remains bearish as it trades below its signal line.

On the derivative front, rollovers dominated the session as NIFTY July Futures shed over 33.77 lakh shares or 22.72% in Open Interest while the August series added over 29.88 lakh shares or 31.04% in Open Interest.

Going by pattern analysis, the Markets have managed to keep its head above its 50-DMA at Close levels and today as well, it is expected to continue to do so. Further to this, on the way up, it is likely to encounter resistance at 100 and 200-DMA levels which are almost converging. It would be out of immediate danger if it manages to move past these two levels. Until this happens, it would continue to consolidate with the levels of 100 and 200DMA acting as immediate resistance the level of 50-DMA acting as immediate support. Any breach, as mentioned in our yesterday’s edition will induce some short term weakness.

All and all, the Markets are likely to remain dominated with rollover activities as we enter the expiry day of the current series. This will not only keep the Markets range bound but also leave it vulnerable to some spikes on either side as well with some amount of volatility ingrained in it. It is advised to keep the exposure limited and resort to purchases on highly selective basis. Cautious optimism is advised for today.

Wednesday, July 29, 2015

Daily Market Trend Guide -- Wednesday, July 29, 2015

MARKET REPORT July 29, 2015

The Markets remained thoroughly consolidation note with a weak bias as it spent the session in a 50-odd points range and ended the day with modest losses. The Markets saw a positive start but soon pared its gains to trade in the negative territory. However, it soon saw a sharp recovery and the Markets formed its intraday high of 8397.40 in the morning trade. The Markets once again pared its recovery and traded flat again. It was at this juncture and in the second half of the session that the Markets lost its directional bias. After moving sideways, it lost some ground and rapidly went down to form the day’s low of 8321.75. The Markets saw some ranged recovery but more or less remained volatile in a given range. It finally ended the day at 8337, posting a modest loss of 24 points or 0.29% while forming a lower top and lower bottom on the Daily Bar Charts.

MARKET TREND FOR WEDNESDAY, JULY 29, 2015

The Markets pose themselves at a critical juncture today and are expected to open on a flat to mildly positive note. The Markets trades below both of its 100 & 200 DMA and it is now expected to take support at its 50-DMA which is 8342 today. This would be a very important support levels to watch out for and any breach at Close levels will see some weakness in the Markets in the immediate short term.

The levels of 8390 and 8450 are immediate resistance levels for the Markets. The supports come in at 8300 and 8250 levels.

The RSI—Relative Strength Index on the Daily Chart is 43.4810 and it has reached its lowest value in last 14-days which is bearish. RSI has set a fresh 14-day low whereas NIFTY has not yet do so and this is Bearish Divergence. The Daily MACD remains bearish as it trades below its signal line.

On the derivative front, rollovers continued as NIFTY July futures shed over 30.93 lakh shares or 17.23% in Open Interest. August series added over 44.93 lakh shares or 87.50% in Open Interest. There has been net addition of over 13 lakh shares in NIFTY indicating beginning of fresh short build up in the system.

Coming to pattern analysis, the Markets have fallen below and breached the rising channel that it was trading in. It is expected to take support at its 50-DMA at Close levels in order to avoid any weakness. It has done so yesterday and it is expected to do so today as well. It is very important to note that the behaviour of the Markets vis-à-vis the levels of 50-DMA would be critically important to watch out for and any breach of this level will induce temporary short term weakness in the Markets.

All and all, having said this, apart from watching the 50-DMA levels at Close, the Markets will also remain dominated with rollover centric activities as we enter the penultimate day of expiry of current series. We continue to reiterate on our advice of refraining from any fresh exposure and maintain liquidity in the immediate short term with cautious outlook for the day.

Tuesday, July 28, 2015

Daily Market Trend Guide -- Tuesday, July 28, 2015

MARKET REPORT July 28, 2015

The Markets took an extremely bearish overturn yesterday following global weakness and ended the day with a sharp cut. The Markets saw lower opening following global weakness and after opening on weaker than expected note; it took further cuts as the day progressed. In the morning session, the Markets continued to trade sideways with opening losses and showed absolutely no signs or intentions to recover. Weakness increased in the second half of the session when the Markets kept making fresh gradual lows. It went on to touch and breach both of its DMAs, i.e. 100 and 200 DMA and formed the day’s low at 8351.55. Again, with no recovery coming in, the Markets ended the day at 8361, posting a sharp cut of 160.55 points or 1.88% forming a sharply lower top and lower bottom on the Daily Bar Charts.

MARKET TREND FOR TUESDAY, JULY 28, 2015

Expect the Markets to open today on a stable note and look for directions. There are fair chances that the Markets arrest its downsides, stabilize and even attempt a pullback. However, the Markets fell out yesterday from its channel and while pulling back the trend line support which it breached might act as short term resistance for the Markets. Overall, the Markets have slightly placed itself in little precarious position.

For today, the levels of 8415 and 8460 might act as immediate resistance for the Markets.

The supports come in at 8340 and 8300 levels.

The RSI—Relative Strength Index on the Daily Chart is 44.7672 and it has reached its lowest value in last 14-days which is bearish. Further, RSI has set a fresh 14-period low but NIFTY has not yet and this is bearish divergence. The Daily MACD has reported a negative crossover and is now bearish as it trades below its signal line.

On the derivative front, NIFTY July futures have shed over 20.06 lakh shares or 10.05% in Open Interest. The August series added over 21.07 lakh shares or 69.60% in Open Interest, adding net of 74,ooo shares. Rollovers in NIFTY stood at 22%.

Coming to pattern analysis, the Markets have fallen out of the small rising channel that it had formed. Because of this, the trend line support it breached yesterday will not act as its immediate short term resistance. Further, the Markets also breached its 100-DMA and 200-DMA and have closed below it. However, it remains within its filter and there are chances that it still continues to take support around these levels.

Overall, though the Markets are expected to open on a quiet note and expected to take some stability, it is likely to continue to remain volatile as it will struggle with the all important support levels at Close. Further, with the rollovers, it will also keep the Markets dominated with rollovers activities. Though some range bound movement and intermittent volatility may be seen, overall, any dip should be utilized to pick selective stocks. Neutral to cautiously positive outlook is advised for today.

Gemstone Equity Research & Advisory Services