Gemstone Equity Research & Advisory Services

Wednesday, May 27, 2015

Daily Market Trend Guide -- Wednesday, May 27, 2015

MARKET REPORT May 27, 2015

Though the Markets pared its losses in the final hour of the trade, it continued to end the day with a modest loss while taking support at its all important 200-DMA at Close levels. Markets saw a flat opening and remained very briefly into the positive territory while forming its day’s high of 8378.90 in the very early minutes of the trade. However, after remaining very briefly in the positive, the Markets came off and traded in negative territory. It continued to trade with capped losses in the first half of the session but the second half saw some more weakness creeping in. The Markets went on to form the day’s low of 8320.05. However, it attempted to take support again at its 200-DMA and it saw some paring of losses from those levels. The Markets finally settled the day at 8339.35, posting a modest loss of 30.90 points or 0.37% while continuing to form a lower top and lower bottom on the Daily Bar Charts.

MARKET TREND FOR WEDNESDAY, MAY 27, 2015

Today, we enter into penultimate day of expiry of current series. Along with this, this also remains a crucially important day for the Markets that can impact its trend in the immediate short term. We are likely to see negative opening today and there are chances that the Markets sees itself opening below its 200-DMA. If this happens, it would be very critically important for the Markets to move past this level again. Until this happens, we would continue to see some bearish undertone in the Markets.

For today, the levels of 8380 and 8450 would act as immediate resistance levels. The supports are expected at 8310 and 8230 levels.

The RSI—Relative Strength Index on the Daily Chart is 48.5271 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 May futures have shed over 11.64 lakh shares or 9.77% in Open Interest whereas June series have added over 20.99 lakhs shares or 47.02% in Open Interest. Overall, on net basis, NIFTY has added over 9.50 lakhs shares in Open Interest. This signifies rollovers of short positions in the Markets. NIFTY PCR stands at 0.99 as against 1.03.

Coming back to pattern analysis, the Markets gave a technical pullback after posting its recent lows on May 7^th. During this pullback, the Markets managed to move past its 200-DMA which it broke on the downside earlier. However, the Markets are not able to confirm this reversal as at least as of today, it has failed to post any higher bottom after recent lows. Today as well, the opening might see the Markets below 200-DMA and therefore, it would be of paramount importance for the Markets to move past this 200-DMA levels again. Until this happens we would continue to witness bearish undertone in the Markets.

All and all, non-technical factors such as currency weakness, weak earnings from key stocks, etc., will continue to weigh on the Markets as well. However, the Markets still are under the process of confirming its reversal and as of now, the bottom of May 7^th holds valid and crucially important. Absence of delivery based buying in the Index components is also weighing in the Markets. Given this scenario, we would reiterate to remain extremely light on the exposure and maintain adequate liquidity until the directional bias is established.

Milan Vaishnav,

Consulting Technical Analyst,
Af. Member: Market Technicians Association (MTA), USA
Af. Member: Association of Technical Market Analysts, INDIA

www.MyMoneyPlant.co.in

http://milan-vaishnav.blogspot.com

+91-98250-16331

milanvaishnav@mymoneyplant.co.in

milanvaishnav@yahoo.com

Tuesday, May 26, 2015

Daily Market Trend Guide -- Tuesday, May 26, 2015

MARKET REPORT May 26, 2015

Markets turned bit corrective today as it opened negative and grew weaker in the second half to end the day with losses. The Markets saw a negative opening on expected lines and traded within a narrow range with capped losses. It spent the morning trade in a sideways manner on low volumes as many major Markets like UK, US and Hong Kong remained shut which led to a lesser participation. However, it was in the second half that the Markets saw some weakness intensifying and it grew weaker. It went on to form the day’s low of 8364.15 towards the end of the session. While no major recovery was seen at lower levels, it finally ended the day at 8370.25, posting a net loss of 88.70 points or 1.05% while forming a lower top and lower bottom on the Daily Bar Charts.

MARKET TREND FOR TUESDAY, MAY 26, 2015

After the Markets remaining in corrective mode yesterday, we can expect a quiet opening in the Markets today. The Markets are likely to open on a flat to mildly positive note and look for directions. They are likely to continue to remain in a broad trading range with the levels of 200-DMA acting as support and the levels of 50-DMA acting as resistance in the immediate short term.

Today, the levels of 8420 and 8465 will act as immediate resistance for the Markets. The supports come in at 8320 levels.

The RSI—Relative Strength Index on the Daily Chart is 50.1338 and it remains neutral as it does not show any bullish or bearish divergence or any failure swing. The Daily MACD remains bullish while trading above its signal line.

On the derivative front, the NIFTY May futures shed over 9.50 lakh shares or 7.39% in Open Interest while June NIFTY Futures added over 6.81 lakh shares or 18.01% in Open Interest showing a net of decline in Open Interest. However, modest rollovers have begun and they are expected to pick up as well. The NIFTY PCR stands at 1.03.

Going by pattern analysis, the Markets currently trade in a broad range with the levels of 200-DMA expected to act as support and the levels of 50 and 100-DMA posing resistance on the upside. However, given the expiry week, the Markets are likely to continue to remain in a broad trading range. Also, the Markets will have to see a conviction based up move with more amount of delivery buying taking place if it has to move past the upper levels of the trading range. Broadly speaking, the Markets have attempted to find a bottom after posting lows as on May 7^th and has attempted a pullback since then. However, it needs to form a higher bottom anytime now and move past the remaining two DMAs in order to confirm the reversal.

All and all, until the Markets moves past its 50 and 100-DMA, it would continue to witness such intermittent bouts of profit taking. Though 200-DMA is all likely to act as major support in case of any downside, the Markets may continue to remain volatile and trade in a broad range. It is advised to continue to remain light on exposure while maintaining a stock specific outlook in the Markets.