Gemstone Equity Research & Advisory Services: 8/16/15

Friday, August 21, 2015

Daily Market Trend Guide -- Friday, August 21, 2015

MARKET REPORT August 21, 2015

Markets spent the session yesterday with a terribly bearish undertone as it opened negative and went on to test all of its DMA’s and ended the day with losses. The Markets saw a modestly negative and resilient opening and traded with very modest losses in the initial trade. Markets continued to trade with very limited losses and in a capped range in the first half of the session. It was in the second half that the Markets saw itself in absolute bearish grip and went on to pare itself. It slipped below its 200-DMA and went on to test its 50-DMA and 100-DMA as well as they lay in close vicinity of each other. It went on to form the day’s low at 8359.75 in the last hour of the trade. No major recovery was seen and the Markets finally ended the day at 8372.75, posting a net loss of 122.40 points or 1.44% while forming a lower top and lower bottom on the Daily Bar Charts.

MARKET TREND FOR FRIDAY, AUGUST 21, 2015

Today, we are all likely to see a gap down opening in the Markets today. We have been mentioning potentially bearish Head and Shoulders formation on Daily Charts in couple of our previous editions of Daily Market Trend Guide and we might witness a downward breach today. Unless the Markets recovers post weak opening, we are likely to see the bearish undertone continuing in the Markets today. If the downside persists, it would mean more bearish structure for the Markets for the immediate short term.

For today, the levels of 8390 and 8425 will act as immediate resistance and supports will come in much lower at 8320 and 8275 levels.

The RSI—Relative Strength Index on the Daily Chart is 44.1047 and it remains neutral as it shows no bullish or bearish divergence or failure swings. The Daily MACD remains bearish as it trades below its signal line.

On the derivative front, NIFTY August futures have added over 2.43 lakh shares or 1.69% in Open Interest. This implies that apart from unwinding that we have witnessed, some amount of fresh shorts have been added to the system as well.

Coming to pattern analysis, we have been mentioning about Head and Shoulders pattern, which is always potentially bearish. As of yesterday, the Markets have been maintaining itself along its neckline which is made up of proxy trend lines comprising of 50-DMA and 100-DMA in close vicinity of each other. Having said this, the Markets have not broken down as of yesterday’s close. However, IMPORTANTLY, with the near gap down opening expected today, we will see a downward breach on the Charts down its neckline. This will imply a fresh bearish structure for the Markets for the immediate short term. Today’s it would be fine if the Markets improve as we go ahead in the session but if such weakness persist at Close levels, we will see some more weakness in the immediate short term.

Overall, the Markets are currently with a weak technical structure. With gap down opening today, we will see a downward breach from the potentially bearish Head and Shoulders formation and this may induce some more weakness in the immediate short term. The positive crossovers of the Markets may pose resistance to the downward breach but it would be important for the Markets to improve as we go ahead in the session. Persistence of weakness at Close levels will alter the structure of the Markets for the immediate short term.

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, August 20, 2015

Daily Market Trend Guide -- Thursday, August 20, 2015

MARKET REPORT August 20, 2015

Markets continued to consolidate today with a positive bias as it recovered from the lows of the day to end the day with modest gains. The Markets saw negative opening on expected lines and formed the day’s low of 8425.95 in the morning trade. At one point while forming these lows, the Markets breached its 200-DMA intraday. However, very much on expected lines, the Markets spent the morning session recovering from the low point of the day. By afternoon, the Markets recovered all of its losses and further went on to trade strongly on the upside. It went on to form the day’s high of 8520.45 by afternoon, recovering nearly 95-odd points from the low point. The Markets then spent the second half of the session trading in a capped range in sideways trajectory. It came off a bit and finally ended the day at 8495.15, posting a modest gain of 28.60 points or 0.34% while forming a parallel bar on the Daily Bar Charts.

MARKET TREND FOR THURSDAY, AUGUST 20, 2015

The Markets have been giving parallel bars and consolidating on Daily Charts and therefore it continues to keep the analysis once again on similar lines. Today as well, while we keep the overall basis of the analysis same, we can expect somewhat negative opening in the Markets today. The Markets may once again see itself opening somewhere in between 200-DMA and 50-DMA and therefore the behaviour of the Markets post opening would continue to remain of critical importance.

For today, the levels of 8525 and 8560 will act as immediate resistance levels for the Markets. The supports come in at 8460 and 8410 levels.

The RSI—Relative Strength Index on the Daily Charts is 51.9445 and it remains neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD remains bearish as it continues to trade below its signal line.

On the derivative front, NIFTY August futures have added over 1.60 lakh shares or 1.13% in Open Interest. This signifies that modest longs have been initiated in the system.

Going by the pattern analysis, the Markets have been hanging on to its 200 and 50 DMA at Close levels after forming a potentially bearish Head and Shoulders formation. The neckline has been formed by proxy trend lines in form of 50-DMA and the Markets have so far managed to hold all of them as Supports at Close levels. The behavior of the Markets vis-a-vis these DMAs would be crucial to watch out for in immediate short term. It would of paramount importance for the Markets to hold on to 8380-8420 range in order to avoid any significant weakness in the near term.

Overall, today, with the negative opening expected, intraday trajectory would be critical for the Markets and would dictate the trend for today as well as for immediate short term. It is advised to refrain from taking any significant exposures and more liquidity should be maintained while limiting the purchases. Volatility will continue to remain; however, some improvement as we go ahead in the session can be expected. Cautious outlook is advised for today.

Wednesday, August 19, 2015

Daily Market Trend Guide -- Wednesday, August 19, 2015

MARKET REPORT August 19, 2015

Markets continued to trade much on expected lines as it consolidated in a volatile trade, managed to hang on to its 200-DMA and ended the day with very minor losses. The Markets saw a better than expected opening and it traded sideways while maintaining those gains. It strengthened further to form the day’s high of 8525.75 in the morning trade. Just when it seemed that the Markets were attempting to bounce back, it once again saw a sharp paring of the morning gains. The Markets came off sharply from the high point of the day. It went on to trade in the negative territory and also formed the day’s low of 8433.60, coming off nearly 90-odd points from the low point of the day. Thankfully, the Markets spent the second half of the session trying to recover from the lows. It managed to recover most of its losses and finally ended the day at 8466.55, posting a minor loss of 10.75 points or 0.13% while forming a parallel bar on the Daily Bar Charts.

MARKET TREND FOR WEDNESDAY, AUGUST 19, 2015

Analysis for today once again remains on similar lines that of yesterday. The Markets are expected to open on a flat to mildly negative note and look for directions. The Markets have been struggling hard to hang on to its 200-DMA and 50-DMA at Close levels and today as well, the intraday trajectory that the Markets form would be crucial to determine the trend for today as well as for immediate short term.

For today, the levels of 8525 and 8550 will act as immediate resistance levels for the Markets. The supports come in at 8459 and 8405 levels.

The RSI—Relative Strength Index on the Daily Charts is 50.0168 and it is neutral as it shows no failure swings or any bullish or bearish divergence. The Daily MACD is bearish as it continues to trade below its signal line.

On the derivative front, NIFTY August futures have continued to shed yet another over 2.41 lakh shares or 1.67% in Open Interest. The NIFTY PCR stands at 0.98.

Coming to pattern analysis, the Markets have been precariously hanging on to the neckline of the fragile head and shoulders formation on the Daily Charts. More so because the neckline represents the proxy support of the DMAs; 50, and 100, and the Markets have so far managed to hold these levels as Close. Today as well, with the kind of opening expected, the Markets will have to manage and remain above the 8450-60 levels in order to prevent any weakness from creeping in. Any weakness, however temporary it may be, will make the Markets test 8400 levels if it breaches the 200-DMA even intraday. However, the patterns exhibit some possibilities of consolidation going on but with a positive bias as the 50-DMA has reported a positive crossover over 100-DMA. In normal course, with such patterns, the Markets may consolidate but usually does not break its bottom.

Overall, as mentioned, the Markets may continue to see consolidation and its behaviour vis-à-vis the levels of 200-DMA would be critically important. It may be noted that despite inherent possibility of buoyancy, the Markets are not completely out of the woods and are susceptible to selling bouts at higher levels. Keeping this is view, we continue to reiterate view of keeping exposures limited until directional bias gets clear.

Tuesday, August 18, 2015

Daily Market Trend Guide -- Tuesday, August 18, 2015

MARKET REPORT August 18, 2015

The Markets witnessed a very volatile session yesterday and also tested its 200-DMA as expected in our yesterday’s edition of Daily Market Trend Guide while it ended the day with modest losses. The Markets saw a relatively quiet and positive opening but in the morning trade it saw a very sharp vertical paring of gains. Post opening, and after forming the day’s high of 8530.60 in the very early minutes of the trade, the Markets came off nearly 100-odd points in the morning trade to form the day’s low of 8428.05. While forming the day’s high and low in the morning trade, the Markets spent the entire session trying to make up with these losses. The first half of the session saw substantial recovery of the gains as the Markets recouped most of its losses. However, it was in the second half when the Markets came off once again. It finally ended the day at 8477.30, posting a net modest loss of 41.25 points or 0.48% while forming a similar top but higher bottom on the Daily Bar Charts.

MARKET TREND FOR TUESDAY, AUGUST 18, 2015

Today’s market analysis continues to remain more or less on similar lines that of yesterday. We can expect the Markets to open on a modestly positive note and once again, just like yesterday, the levels of 200-DMA will continue to act as crucial support for the Markets. Markets will have to maintain itself above the 200-DMA levels in order to prevent any weakness from creeping in again. Also, the pattern changes on the Daily Charts are showing chances of inherent buoyancy getting built up once again.

For today, the levels of 8530 and 8575 will act as immediate resistance levels for the Markets. The supports come in at 8457 and 8405 levels.

The RSI—Relative Strength Index on the Daily Chart is 50.7270 and it remains neutral showing no bullish or bearish divergence or any failure swings. The Daily MACD remains bearish while trading below its signal line.

On the derivative front, NIFTY August futures have shed over 5.60 lakh shares or 3.72% in Open Interest. This very clearly makes visible that unwinding of positions continued in the futures segment. It would be necessary to see if fresh longs are initiated at these levels.

Coming to pattern analysis, as mentioned often in our previous editions of Daily Market Trend Guide, the Markets have, as of now, survived a scare from a potentially bearish Head and Shoulders formation on the Daily Charts. We had mentioned that this is little vague and not so classical formation and the Markets took support at its DMAs and bounced back. The up move that we saw on Friday, 14^th, bought the Markets back into the trading range. Also, the 50-DMA has reported a positive crossover as it has crossed the 100-DMA from below. This indicates chances of upward momentum returning to the Markets in the immediate short term.

Overall, from the pattern analysis and the overall structure of the Charts, we can rely that the Markets have held on to its 200-DMA and 100-DMA as support at Close levels as of now. So long as the Markets maintain itself above these two DMAs, we will see it oscillating in a given range with a upward bias. Weakness will creep in only in event of the Markets breaching these levels. Overall, continuation of cautious approach with modest exposures in advised for today.

Gemstone Equity Research & Advisory Services