Gemstone Equity Research & Advisory Services: 9/27/15

Thursday, October 1, 2015

Daily Market Trend Guide -- Thursday, October 01, 2015

MARKET REPORT September 30, 2015

The Markets witnessed a steady up today after opening on a positive note and it ended the day with decent gains as well. The Markets saw a better than expected opening in the morning as it opened on a higher note. It spent the first half of the session trading in a narrow range but continued to maintain its opening gains. It was the second half of the session that the Markets saw some more strength coming in. The Markets went on to form the day’s high of 7957.70 towards the end of the session. It did form these highs but overall it continued to remain in the broad rectangle trading range that it has been in since couple of weeks. Markets maintained these levels and finally ended the day at 7948.90, posting a decent gain of 105.60 points or 1.35% while forming a higher top and much higher bottom on the Daily Bar Charts.

MARKET TREND FOR THURSDAY, OCTOBER 01, 2015

The Markets are at very critical juncture today. We can expect the Markets to open on a decently positive note. However, this expected but imminent positive opening will see the Markets opening or trading near its very critical resistance zone of 7960-8000 levels. The Markets have a very critical and multiple pattern resistances at 7960-8000 levels and further and it would be critical to see if the Markets moves past them successfully. It would take Markets good amount of participation while on its way up to make a sustainable attempt to reverse its trend.

For today, the levels of 8000 and 8060 will act as immediate resistance for the Markets. The supports come in at 7875 and 7840 levels.

The RSI—Relative Strength Index on the Daily Chart is 50.7506 and it has reached its highest value in last 14-days which is bullish. Also, the RSI has formed a fresh 14-period high but NIFTY has not yet and this is Bullish Divergence. The Daily MACD remains bullish as it trades above its signal line.

On the derivative front, the NIFTY October futures have shed over 1.71 lakh shares or 0.91% in Open Interest. Individually speaking, this figure is insignificant but it has certainly shown some amount of short covering involved in the trade yesterday.

While looking at patterns, pattern analysis makes it evident that the Markets still continue to remain in a broad trading range and have currently closed below its key resistance levels as of yesterday. The Markets face formidable multiple resistances ahead in terms of the breach supports on its way down and the Gap that it created couple of weeks back. All these will act as major pattern resistances on its way up. The Markets are likely to face serious resistance at 8000-8060 levels. It will have to move past these levels and attempt to fill up the gap that it had created. In nutshell, though the Markets have shown decent up moves it still remains much in the woods and it requires up moves with conviction and volumes to move past its key pattern resistances.

All and all, it is pretty evident that we are set to see a decently positive opening but at the same time also acknowledge the fact that the Markets will trade very near to its important and multiple pattern resistances. This will continue to keep the Markets vulnerable to seeing profit taking at higher levels. Also when today is the last working day of the Week once again, we can see some consolidation at higher levels. It is strongly advised to use any available up moves to book and protect profits at higher levels while continuing to keep purchases at moderate 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

+91-98250-16331
milan.vaishnav@equityresearch.asia
milanvaishnav@yahoo.com

Wednesday, September 30, 2015

Daily Market Trend Guide -- Wednesday, September 30, 2015

MARKET REPORT September 30, 2015

Markets witnessed enormous amount of volatile as it swung nearly 325-odd points during the entire day and ended the day with modest gains after reacting to higher-than-expected 50 bps rate cut by the RBI. The Markets opened expectedly on a lower note following weak global cues but remained much resilient in the initial trade. However, it became weak later in the afternoon as it formed its day’s low of 7691.20. However, it did not breach the support line that we mentioned in our yesterday’s edition of Daily Market Trend Guide and it remained sacrosanct. It was immediately post RBI 50 bps rate cut that the Markets saw a sharp parabolic upswing. It recovered over 120-odd to recover all of its losses. It further went on to form the day’s high of 7926.55 by afternoon. However, it was the late afternoon trade that saw the Markets coming off once again. It pared some 100-odd points once again but finally ended the day at 7843.30, posting a modest gain of 47.60 points or 0.61% while forming a higher top but lower bottom on the Daily Bar Charts.

MARKET TREND FOR WEDNESDAY, SEPTEMBER 30, 2015

The Markets have remained in a broad trading range after taking support near the prescribed pattern supports. Today, we can see the Markets opening on a modestly positive note and look for directions. They way the Markets have not breached its support levels, on the same lines; they are not completely out of the woods as well. They continue to remain in a broad trading range while still continuing to trade below its key resistance zone.

For today, the levels of 7910 and 7945 will act as immediate resistance for the Markets. The supports come in at 7790 and 7750 levels.

The RSI—Relative Strength Index on the Daily Chart is 45.4254 and it remains neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD still continues to remain bullish as it trades above its signal line.

On the derivative front, the NIFTY October series have added over 2.25 lakh shares or 1.21% in Open Interest. The NIFTY PCR stands at 0.91 as against 0.90 yesterday. Some fresh shorts have been added as the Markets have reported net increase in Open Interest after coming off nearly 100-odd odd points from the high point of the day.

Coming to pattern analysis, the Markets have continued to remain in a broad trading range after yesterday’s pullback from lower levels. The pattern support of 7650-7670 level still hold good for the Markets. However, on the upside, the Markets continue to face resistance near its key resistance zone of 7960-8000 levels. The Markets have not been able to move past this zone after breaking it on the downside. Currently it continues to trade in a very broad trading range. The overall trend in the Markets remains sideways and due its is broad trend, some good amount of volatility have continue to remain ingrained in it.

Overall, it is pretty clear from the technical charts that the Markets have failed to form any directional bias. It still continues to trade with uncertain bias and remains in a broad trading range. The key resistance zone of 7960-8000 levels still hold good for the Markets. There will be no sustainable up move until the Markets moves past this level. However, with the trading range remaining quite broad, the Markets too will witness some good amount of volatility as well. It is advised to continue to remain very modest on exposures and maintain liquidity in the Markets.

Tuesday, September 29, 2015

Daily Market Trend Guide -- Tuesday, September 29, 2015

MARKET REPORT September 29, 2015

We had expressed concerns about the Markets continuing to remain vulnerable from selling pressure at higher levels in our yesterday’s edition of Daily Market Trend Guide. Keeping in line with the analysis carried out the Markets succumbed to high degree of caution ahead of RBI Credit Policy review as it ended the day after coming from the day’s high. The Market saw a relatively better opening and traded stable in the first half of the day forming the day’s high of 7893.95. The Markets showed relative stability but it was the second half that did much of the undoing for the Markets. Caution weighed in on expected lines as after a range bound trade in the first half the Markets saw rapid paring of gains in the second half of the session. The Markets went on to form the day’s low of 7787.95, coming off nearly 105-odd points from the high point of the day. No recovery was seen and the Markets finally settled the day at 7795.70, posting a net loss of 72.80 points or 0.93% after forming a similar top but lower bottom on the Daily Bar Charts.

MARKET TREND FOR TUESDAY, SEPTEMBER 29, 2015

Markets are poised at a very critical juncture today. Global set up remains and we are likely to open on a gap down opening today again as well. However, the Markets are likely to see openings around the important pattern support at 7660-7675 zone and the behaviour of the Markets vis-à-vis this level would be extremely important to watch out for. There are chances that the Markets remain sideways in the morning trade and then react to the RBI Credit Policy review wherein the 0.25% cut remains discounted for.

For today, the levels of 7920 will continue to remain as resistance. The supports come in at 7720 and 7650-70 levels.

The RSI—Relative Strength Index on the Daily Chart is 42.8384 and this remains 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 October futures have added over 2.30 lakh shares or 1.26% in Open Interest. This signifies creation of fresh shorts of modest quantities in the index futures. The NIFTY PCR stands at 0.90 as against 0.93.

Coming to pattern analysis, the Markets have failed to clear the 7960-8000 resistance zone. This was the support that it broke further following the breakaway gaps on the downside in the first week of September. Since then, the Markets have failed to clear these levels and continue to trade below that with uncertain bearish bias. Having said that, the Markets have a downside pattern support of 7650-7670 levels. Today’s imminent gap down opening is likely to see the Markets trade near those supports. After such imminent gap down opening, the Markets are expected to trade sideways until it reacts to RBI Credit Policy review. If the Markets breach this support zone of 7650-7670, it will get weaker in coming days but the intraday behaviour of the Markets vis-à-vis this level will be important to watch out for.

Overall, some chances of the Markets improving in the second half of the session cannot be completely ruled out for. But some amount of uncertainty will continue to persist. It is advised to refrain from shorts until the Markets breach its pattern support. While remaining completely light and moderate on positions, conservation of cash is advised for today.

Monday, September 28, 2015

Daily Market Trend Guide -- Monday, September 28, 2015

MARKET REPORT September 28, 2015

Market shad a relative quiet session and traded much on the expected lines as it ended the day with modest gains amid some amount of volatility. Markets saw a modestly negative opening and it soon weakened further in the morning trade to form the day’s low of 7804.10. However, it soon recovered by late morning trade to trade flat around it s previous close. The Markets spent some time by trading in a capped range in sideways trajectory until afternoon trade. In the second half, the Markets saw some strength returning. It saw a sharp spurt, which was mainly led by expiry related short covering, which took the Markets to its day’s high of 7894.50 by late afternoon trade. Some sideways movement was again observed and the Markets finally settled the day at 7868.50, coming off a bit from its highs and posting a modest gain of 22.55 points or 0.29% while forming a higher top and higher bottom on the Daily Bar Charts.

MARKET TREND FOR MONDAY, SEPTEMBER 28, 2015

The Markets shall open today after a long weekend and they are expected to open on a modestly lower note and look for directions. The expiry had been relatively quiet previous week and the Markets continue to remain in a neutral zone and rule still below its key resistance levels of 7960-8000 levels. The set up has been little bearish so long as the Markets continue to rule below these levels. The intraday trajectory would continue to remain crucial.

For today, the levels of 7920 and 7945 will act as immediate resistance levels while the supports would come in at 7810 and 7750 levels.

The RSI—Relative Strength Index on the Daily Chart is 45.9304 and it remains neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD stands bullish as it trades above its signal line. On the Weekly Charts, the Weekly RSI is 40.9399 and this also remains neutral without showing any bullish or bearish divergence or any failure swings. The Weekly MACD is bearish as it trades below its signal line.

On the derivative front, the NIFTY October series have added over 38.55 lakh shares or 26.56% in Open Interest. The Thursday’s up move has been largely on account of short covering and the overall rollovers have been slightly below average of past six months but in line with last three months. NIFTY PCR stands at 0.93 as against 0.95.

Coming to pattern analysis, we once again come to the major support zone of 7960-8000 levels that the Markets broke on the downside after forming a bearish breakaway gap in the first week of September. The Markets have not been able to fill up those gaps and that area continues to act as major resistance while it moves up. Before that, it will also face resistance in 7960-8000 levels as well. These were the major triple support pattern support that the Markets broke on the downside. These levels, i.e. 7960-8000 will continue to pose resistance as well. Until the Markets moves past these levels, it will continue to remain vulnerable to selling pressure from higher levels.

Overall, the Markets will continue to remain in a broad trading range with the zone of 7960-8000 levels continuing to act as a resistance. Until the Markets remain below these levels, we will continue to see the Markets also remain vulnerable to selling bouts from higher levels. Keeping this in view, we continue to reiterate very cautious stand on the Markets. While avoiding shorts, dips should be used to make fresh purchases but in moderate quantities and maintain a selective approach.

Gemstone Equity Research & Advisory Services