Gemstone Equity Research & Advisory Services: 10/11/15

Friday, October 16, 2015

Daily Market Trend Guide -- Friday, October 16, 2015

MARKET REPORT October 16, 2015

The Markets had a buoyant session yesterday as it ended the day with decent gains after better than expected opening. Though positive opening was expected, the Markets saw a stronger opening and traded sideways in a narrow range in the morning trade. The late afternoon trade saw the Markets getting stronger. The Markets continued to maintain these gains and continued to trade in a narrow range and in sideways trajectory. Some more strength was seen coming in as the Markets went on to form its intraday high of 8190.55 by late afternoon trade. It came off a bit from its highs but more or less went on to maintain its gains while resisting to its 100-DMA. The Markets finally ended the day at 8179.50, posting a net gain of 71.60 points or 0.88% forming a higher top and higher bottom on the Daily Bar Charts.

MARKET TREND FOR FRIDAY, OCTOBER 16, 2015

Markets have resisted to their 100-DMA yesterday and has halted its up move there. Today, with modestly positive opening expected, the Markets will open near their key pattern resistance levels of 100-DMA and therefore this level along with another major pattern resistance will continue to test the strength of the Markets. The Markets continue to remain vulnerable to weakness around these pattern resistances and therefore their behaviour vis-à-vis these levels would be important to watch out for.

For today, the levels of 8210 and 8240 will act as important resistance for the Markets. The supports come in lower at 8130 and 8070 levels.

The RSI—Relative Strength Index on the Daily Chart is 58.7669 and it remains neutral as it does not show any bullish or bearish divergence or any failure swings. The Daily MACD continues to remain bullish while trading above its signal line.

On the derivative front, the NIFTY October futures have added over 3.38 lakh shares or 1.71% in Open Interest. This shows the continuing display of inherent strength of the Markets even while consolidating. The NIFTY PCR stands unchanged at 1.00

Coming to pattern analysis, the Markets have been now consolidating for over a week after some six days of straight gains and adding nearly 460-odd points from the immediate lows. Having said this, this consolidation is taking place after the Markets cleared one important pattern resistance and now oscillates between the to major pattern resistances. The upper end of these pattern resistances is it’s 100-DMA of the Markets and the upper end of the gap that the Markets created in the first week of September. As mentioned in our previous edition of the Daily Market Trend Guide any fresh sustainable up move shall occur only after the Markets moves past these two major pattern resistances.

All and all, the Markets still continue to oscillate in a range and continue to remain in consolidation. Fresh up moves shall occur only beyond 8230-8240 levels and until that happens we will continue to see the Markets oscillating in a broad range. Today, with the Markets expected to open near its resistance levels, it would be important to see the intraday trajectory that the Markets forms because at these levels it still remain vulnerable to profit taking. Overall, while maintaining liquidity, selective and stock specific approach is advised with cautious outlook 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

Thursday, October 15, 2015

Daily Market Trend Guide -- Thursday, October 15, 2015

MARKET REPORT October 15, 2015

The Markets remained heavily under consolidation and ended the day with modest losses once again after oscillating in a narrow 25-odd points range. The Markets saw a modestly negative opening but after that it managed to crawl back into the positive territory in the first hour of the trade. The Markets also formed its intraday high of 8139.30. However, by not being able to capitalize on this, the Markets slowly gave up these modest gains and slipped into the negative. While remaining in downward sloping channel, the Markets formed its intraday low of 8096.35 in the afternoon trade. The second half of the Markets saw somewhat sharp recovery from lower levels. The Markets recovered all of its losses but it did so on very less volumes. This recovery was again, not sustained, and the Markets slipped back to its lower levels once again. It finally ended the day at 8107.90, posting a net loss of 23.80 points or 0.29% while forming a lower top but slightly higher bottom on the Daily Bar Charts.

MARKET TREND FOR THURSDAY, OCTOBER 15, 2015

Though the Markets have held on to its 50-DMA levels at Close, they are not so comfortably out of the woods as yet. The consolidation is likely to continue and following this, the Markets are set to see a modestly positive opening today. However, post opening, as always, it would be critical to see if the Markets attempts to capitalize and build on its positive opening or ends up consolidating again by paring gains during the day.

For today, the levels of 8140 and 8210 will act as immediate resistance for the Markets. The supports come in at 8075 and 8000 levels.

The RSI—Relative Strength Index on the Daily Chart is 55.0436 and it remains neutral as it shows no bullish or bearish divergence or any failure swing. The Daily MACD continues to remain bullish as it trades above its signal line.

On the derivative front, the NIFTY October futures have shed over 13.04 lakh shares or 6.19% in Open Interest. This is clear offloading / unwinding of positions that appear to have happened. This is likely and enough to cause the Markets to consolidate for some more time to come. The NIFTY PCR stands at 1.00.

While having a look at pattern analysis, the Markets continue to trade in a range above its 50-DMA and one of the pattern resistances it broke on the upside, and between 100-DMA and the upper end of the “gap” which it created in the first week of September. The Markets have been oscillating in this broad range for a while now. It is important to note that any fresh up move shall take place only above the levels of 8230. Any movement in between this would be mere oscillations. Any breach on the downside may cause the Markets to retest its earlier pattern supports.

All and all, while the Markets are struggling to confirm its reversal that it has attempted over this month, we advise to keep the overall exposure limited in this Markets which are currently devoid of any directional bias. The Markets may test its important pattern supports once again. However, we also continue to reiterate to refrain from shorts as Markets have multiple supports on the downside and use downsides to make moderate purchases on selective basis. Overall, while remaining light on positions, cautious outlook should be continued on the Markets.

Wednesday, October 14, 2015

Daily Market Trend Guide -- Wednesday, October 14, 2015

MARKET REPORT October 14, 2015

Markets continued to correct yesterday as well and remained in downward trajectory throughout the day but finally ended the day with nominal loss after recovering in the last hour of the trade. The Markets saw a quiet opening on expected lines and formed its intraday high of 8150.25 in the early minutes of the trade while it traded positive for a very brief period. Soon after this, the Markets drifted into negative territory but did not see any major losses as it traded in a very narrow range of 22-odd points. It was the second half of the session once again that saw the Markets slide again. The Markets started to retrace once again and by late afternoon trade and went on to post the day’s low of 8088.60. It was once again the last hour of the trade that showed sharp recovery from lower levels. The Markets managed to recoup most of its losses and finally managed to settle the day at 8131.70, posting a nominal loss of 11.90 points or 0.15% while forming a lower top and lower bottom on the Daily Bar Charts.

MARKET TREND FOR WEDNESDAY, OCTOBER 14, 2015

Markets pose themselves at a critical juncture and they are slated once again to open on a modestly negative note. The Markets are likely to test its 50-DMA levels and it would be extremely important to see if they manage to trade above this. Any slippage below this will have the Markets testing yet another pattern support on the Daily Charts. The intraday trajectory that the Markets form will continue to play crucial role along with the volumes.

The levels of 8180 and 8230 will act as immediate resistance levels for today. The supports come in at 8085 and 8030 levels.

The RSI—Relative Strength Index on the Daily Chart is 56.6217 and it remains neutral as it shows no bullish or bearish divergence or failure swings. The Daily MACD remains bullish as it continues to trade above its signal line.

On the derivative front, the NIFTY October futures have shed over 7.58 lakh shares or 3.47% in Open Interest. This leaves little gap in interpretation as the Markets have seen most of the reduction in OI in the last minute of the spurt. This translates into sharp short covering from the lows of yesterday and on the same breadth, it leaves some gap for further unwinding as well. The NIFTY PCR stands at 1.01 today.

On the pattern analysis front, the Markets have resisted to its 100-DMA and the upper end of the “gap” that it created in the first week or September. On the downside, it has two pattern supports which are important to watch for. The first would be the zone of 50-DMA, i.e. 8085-8060 levels and if these are breached, the important pattern support that exist is 8000-levels. The volumes have been lower relatively and the Markets are likely to test is 50-DMA today if the weakness post opening persists for some more time. As mentioned earlier, it would be critically important for the Markets to find base early and resist any weakness from thereon.

Overall, the Markets are showing signs of some intermediate weakness and there are chances that we continue to see the Markets once again in consolidation phase. As mentioned in our previous edition, a sustainable up move shall occur only after the Markets moves past its 100-DMA and the pattern resistance thereafter. However, so long as it continues to trade above the mentioned pattern supports, any downsides should be continued to be utilized to make limited selective purchases. While there is no structural breach on the Charts, shorts should be strictly avoided while maintaining a cautious outlook on the Markets.

Tuesday, October 13, 2015

Daily Market Trend Guide -- Tuesday, October 13, 2015

MARKET REPORT October 13, 2015

The Markets continued to show healthy consolidation yesterday as well as it continued to resist to its congestion zone and came of the opening highs to end the day with modest losses. The Markets saw a modestly positive opening which had the Markets open in their congestion zone. The Markets formed its intraday high of 8244.50 in the very early seconds of the trade and soon came off from those levels in the morning trade to trade flat. The Markets saw itself heading nowhere at least in the first half and saw itself trading around its previous close. The second half of the session saw some more weakness creeping in. The Markets lost some ground further and went on to form the day’s low of 8128.20, coming off nearly 115-odd points from the high point of the day. It finally settled the day at 8143.60, posting a modest loss of 46.10 points or 0.56% while forming a slightly higher top but lower bottom on the Daily Bar Chart.

MARKET TREND FOR TUESDAY, OCTOBER 13, 2015

The Markets have continued to resist to its congestion zone yesterday and today as well this zone will continue to pose as important resistance levels for the Markets. This keeps the analysis more or less on similar lines again as we can expect the Markets to open on a flat note today as well and look for directions and react to macro data which came out yesterday which remained somewhat better than expected. In any case, the congestion zone between the 50-DMA and the 100-DMA / upper band of the gap will continue to remain important pattern resistance.

For today, the levels of 8215 and 8250 will continue to remain immediate resistance for the Markets. The supports come in at 8092 and 8060 levels.

The RSI—Relative Strength Index on the Daily Chart is 57.3856 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, and Engulfing Bearish Pattern has occurred. This formation is a potential signs that the Markets may continue to resist to this zone for some more time to come.

On the derivative front, the NIFTY October futures have added over 5.94 lakh shares or 2.80% in Open Interest. This clearly points finger towards addition of short positions in the Markets. The NIFTY PCR stands at 1 as against 1.02 yesterday.

While having a look at pattern analysis, the Markets have been consolidating in a ranged manner after moving past its resistance levels of 8000-8062 levels. The Markets have now resisted to the congestion zone created by the upper end of the “gap” that the Markets created in first week of September and also to the 100-DMA levels that falls just around that. The Markets have been oscillating in range bound manner in this zone after some 450-odd points of rise in six straight sessions. The Markets would see a sustainable up move once its moves past these levels. Until this happens, we will continue to see the Markets oscillating and consolidating. However, major downsides are unlikely as suggested by overall pattern analysis and as supported by F&O data.

Overall, the Markets are once again set to see a flat opening. The Markets will also continue to oscillate while attempting to move up again towards the upper end of the congestion zone. The F&O data suggests limited downside and therefore we reiterate our advice to make selective purchases on every corrective dip. In the same breadth, since the Markets are yet to move out of the congestion zone, any existing profits may be vigilantly protected at higher levels.

Gemstone Equity Research & Advisory Services