Gemstone Equity Research & Advisory Services: 10/4/15

Thursday, October 8, 2015

Daily Market Trend Guide -- Friday, October 09, 2015

MARKET REPORT October 09, 2015

Markets snapped its six-day winning streak as it opened lower and ended the day with modest losses while continuing to consolidate. The Markets saw a quiet opening and opened modestly into the positive and formed its intraday high of 8196.75 in the early minutes of the trade. The Markets thereafter slipped gradually into negative territory. It went on to slip further into the red by afternoon trade. The Markets spent most of the time by until late afternoon trade remaining in sideways trajectory while maintaining its modest losses. It went on to also form its intraday low of 8105.85 by then. It was the last hour and half of the trade where the Markets attempted to make a modest recovery. It saw some minor recovery off its intraday lows but that remained limited. The Markets finally settled the day at 8129.35 posting a modest loss of 48.05 points or 0.59% while forming a higher top but lower bottom on the Daily Bar Charts.

MARKET TREND FOR FRIDAY, OCTOBER 09, 2015

The Markets are likely to remain in corrective mode today as well and there are chances that we may see one more day of consolidation on the Charts. The Markets are expected to open on a relative quiet mode but the levels of 50-DMA would be important to watch out for. It would be important for the Markets to maintain itself above these levels failing which it is likely to test its important pattern support.

For today, the levels of 8180 and 8230 will continue to act as immediate resistance whereas the support would come in at 8100 and 8060 levels.

The RSI—Relative Strength Index on the Daily Chart is 57.6893 and it 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 Candles, an Engulfing Bearish Pattern has occurred. Since this pattern has occurred after an up move, it is likely temporarily pause this up move and cause the Markets to consolidate.

On the derivative front, the NIFTY October futures have shed nominal 3875 shares or 0.02% in Open Interest. With total OI remaining nearly unchanged, it continues to portray underlying resilient undertone in the Markets.

Coming to pattern analysis, the Markets are continuing to consolidate for the second day as well after rising nearly 450-odd points in six straight sessions. It is currently trades below its 100-DMA and above its 50-DMA. In event of any consolidation continuing to consolidate, the level of 50-DMA is expected to act as support. If the Markets breach this level, then it may test its important pattern support of 8060 levels but it seems less likely.

All and all, the Markets are likely to continue to consolidate, at least in the initial trade. However, even if it sees some more downsides, it comfortably trades above its important pattern supports. Further, the F&O data indicates underlying buoyancy and there are chances that the Markets attempts to resume its up move. Any consolidation / correction should be utilized to make fresh purchases. While keeping purchases selective, shorts should be avoided and cautiously positive outlook is advised for the day.

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

Daily Market Trend Guide -- Thursday, October 08, 2015

MARKET REPORT October 08, 2015

Markets traded much on the analyzed lines as it consolidated but ended the day with modest gains while ended the sixth day with gains. The Markets saw a modestly negative opening but though it opened negative it crawled back into the positive territory in the morning trade. Markets gained some further strength as it piled up modest gains in the late morning trade. However, it saw some corrective pressure from the higher levels; the Markets pared all of its gains by afternoon trade and dipped into the negative territory. It formed its intraday low of 8132.90 while doing so but it was the second half of the session that saw the recovery. The Markets not only recovered from its intraday low but went on to trade in the positive territory and even form the high point of the day at 8188.90. The Markets finally ended the day at 8177.40, posting a net gain of 24.50 points or 0.30% while forming a higher top and higher bottom on the Daily Bar Charts.

MARKET TREND FOR THURSDAY, OCTOBER 08, 2015

Today’s analysis continue to remain on similar lines that of yesterday as the Markets are once again likely to open on a flat note and consolidate as the day advances. With the opening expected flat, the Markets will continue to resist around mentioned levels and the intraday trajectory it forms would be critical to decide the trend for today. Over 450-odd points of rise in last seven straight session continues to keep the Market vulnerable to some range bound consolidation or minor profit taking bouts at higher levels.

The levels of 8195 and 8240 will continue to act as important pattern resistance for the Markets. The supports come in at 8130 and 8090 levels.

The RSI—Relative Strength Index on the Daily Chart is 60.6534 and it has reached its highest value in last 14-days which is bullish. It does not show any bullish or bearish divergence. The Daily MACD remains bullish as it trades above its signal line.

On derivative front, the NIFTY has gone on to add yet another over 8.89 lakh shares or 4.38% in Open Interest. This very clearly indicates the bullish undertone and it is likely to keep the Markets restricted to just consolidation than any major profit taking. The NIFTY PCR stands at 1.03 as against 0.99.

Coming to pattern analysis, as mentioned in our yesterday’s edition, the Markets have managed to move past its important resistance zone of 7960-8000 levels and 8060. In event of any consolidation or minor profit taking bouts, these levels, which were resistance earlier, are not expected to act as support. On the upper side, the levels of 8240 would be important to watch out for as it is yet another important pattern resistance. Until the Markets moves past it, we will continue to witness ranged consolidation and minor profit taking bouts at higher levels.

Overall, the Markets are likely to consolidate as it is expected to open on a flat note. The Markets would also remain vulnerable to minor profit taking bouts from higher levels but at the same time, the undertone continue to remain evidently buoyant. So, any consolidation is likely to remain limited to range bound movement and no major correction should be seen. While keeping this in view, while protecting profits at higher levels, we continue to reiterate to make selective purchases as well.

Wednesday, October 7, 2015

Daily Market Trend Guide -- Wednesday, October 07, 2015

MARKET REPORT October 07, 2015

The Markets showed good amount of resilience yesterday after Monday’s gain as it ended the day with modest gains recovering from the day’s lows. The Markets saw little subdued opening and after opening in the positive note it drifted slowly in the first half of the session to trade flat. By afternoon trade the Markets gradually but slowly dipped into the negative. It got little weaker by afternoon as it formed the day’s low at 8096.50 but took support at its 50-DMA. The second half of the session saw some decent reversal coming in. The Markets reversed its trend and recovered its losses to trade flat. The late afternoon trade saw the Markets going further into positive territory. It further went on to form the day’s high at 8180.95, recovering nearly 85-odd points from the low point of the day. Some gains were pared from these levels and the Markets finally settled the day at 8152.90, posting a modest gain of 33.60 points or 0.41% while continuing to form a higher top and higher bottom on the Daily Bar Charts.

MARKET TREND FOR WEDNESDAY, OCTOBER 07, 2015

Markets are likely to see some consolidation today. We are likely to see the Markets opening on a flat note and look for directions. It is important to note that the Markets have advanced over 490-odd points in last five sessions and therefore it cannot be ruled out that it might see itself consolidating at higher levels. It is also important to note that the Markets are approaching its another pattern resistance as well.

For today, the levels of 8180 and 8225 will act as immediate resistance levels for the Markets. The supports would come in at 8110 and 8060 levels.

The RSI—Relative Strength Index on the Daily Chart is 59.6723 and it has reached its highest value in last 14-days which is bullish. It does not show any bullish or bearish divergence on the Chart. The Daily MACD remains bullish as it trades above its signal line.

Coming to derivative front, the NIFTY October series have shed a 17,750 shares or nominal 0.09% in Open Interest. The OI, practically remains unchanged, and therefore we can safely assume continuation of bullish undertone in the Markets. The NIFTY PCR stands at 0.99 as against 0.97.

Coming to pattern analysis, the Markets have broken out of the broad trading range as mentioned often in our previous editions of Daily Market Trend Guide. While doing so, it has moved past its key resistance levels of 7960-8000 zone and also 8060 levels. It now trades above its 50-DMA and in event of any consolidation, it is likely to test supports of its 50-DMA levels. In event of some consolidation persisting, it is likely to test its supports of 8060 levels. This is because this is the level which was as resistance earlier and is now expected to act as support in event of any consolidation.

All and all, given the technical structure of the Markets and also given the fact that it is risen some 490-odd points in last five sessions, it is very much likely that it sees some selling pressure and minor profit taking at higher levels. Any up moves should be now utilized to protect existing profits. Dips should also be used to make modest purchases while remaining extremely selective. Cautious optimism is advised for today.

Tuesday, October 6, 2015

Daily Market Trend Guide -- Tuesday, October 06, 2015

MARKET REPORT October 06, 2015

Markets had a very strong session as it opened on a gap up and strengthened further to move past its key resistance zone to end the day with robust gains. The Markets saw a sharply higher opening after it opened yesterday after a long weekend. The opening was supported by positive and strong global cues. The opening levels of the Markets saw itself opening near its key resistance zone of 8000-8061 levels. The Markets spent the first half of the session trading sideways in a narrow range while fiercely protecting its opening gains. It was in the second half that the Markets broke out on the upside while it formed its intraday high of 8128.90 while it went on to test its 50-DMA. This up move too was sustained and the Markets finally settled the day at 8119.30, posting a robust gain of 168.40 points or 2.12% while forming a sharply higher top and higher bottom on the Daily Bar Charts.

MARKET TREND FOR TUESDAY, October 6, 2015

The Markets are set for a decently positive opening once again as and have attempted a serious trend reversal attempt. Expect the Markets to open on a strong note and continue with its yesterday’s up move. The Markets have halted their up move at its 50-DMA and today, with its opening above it, this level is likely to act as support if the Markets close above this level. More importantly, the 7960-800 zone and the levels of 8061 will not act as major pattern support in future.

For today, the levels of 8170 and 8205 will act as immediate resistance for the Markets. The supports will come in at 8061 and 8000 levels.

The RSI—Relative Strength Index on the Daily Chart is 58.3498 and it has reached its highest value in last 14-days which is bullish. The Daily MACD remains bullish as it trades above its signal line.

On the derivative front, the NIFTY October futures have 12.44 lakh shares or 6.52% in Open Interest. This is a very strong indication of the overall long and bullish bias of the participants. The NIFTY PCR stands at 0.94 today.

While having a look at pattern analysis, post the lows formed in the first week of September, the Markets were trading in a broad trading range in a rectangle. Having said this, the levels of 7960-8000 range and further at 8061 were one of the major pattern resistances on the Daily Charts. The reason was that the former was the major support that the Markets broke on the downside and the later was the “gap” that the Markets created while opening on a gap down in September first week. Further to this, in yesterdays up move, the Markets have managed to move past this level in a decisive move and in future, in any event of consolidation or correction, these levels are expected to act as important pattern support. The Markets currently have halted at its 50-DMA but with today’s expected higher opening, it is likely to fill up gap and move towards meet its another pattern resistance at 8235 levels.

Overall, the Markets are poised for a continuation of up move and it is likely to fill up the gap that it has created and is likely to approach another major pattern resistance level of 8235. The Markets is likely to see some consolidation or minor profit taking at higher levels. So, in the event of the Markets approaching 8200 levels, it is advised to continue to lay emphasis on protecting profits at higher levels. Purchases may be made on any dips on very selective basis as sectoral out performance would continue.

Gemstone Equity Research & Advisory Services