Gemstone Equity Research & Advisory Services

Wednesday, June 15, 2016

Daily Market Trend Guide -- Wednesday, June 15, 2016

MARKET TREND FOR WEDNESDAY, JUNE 15, 2016

Expect the Markets to open on a modestly positive note and look for directions and attempt and find some stability. The Markets have traded precisely on analyzed lines yesterday and the levels of 8050-8060 have held out as support twice. These levels would be again critically important to watch out for and it would be important for the Markets to maintain themselves above these levels. If the Markets breach these levels, then the possibility of it testing its 50-DMA would increase.

For today, the levels of 8140 and 8175 will act as immediate resistance levels or the Markets. The supports come in at 8050 and 8010 levels.

The RSI—Relative Strength Index on the Daily Chart is 55.5830 and it has reached its lowest value in last 14-days which is bearish. RSI has set a fresh 14-period low while NIFTY has not yet and this is Bearish Divergence. The Daily MACD remains bearish as it trades below its signal line.

On the derivative front, the NIFTY June futures have shed over 16.42 lakh shares or 7.92% in Open Interest. The NIFTY PCR stands at 1.09 as against 1.11 yesterday.

While having a look at pattern analysis, the Markets have been consolidating post forming high of 8294. However, while doing so, it has created a gap between 8162-8070 levels. This zone is likely to act as some minor resistance when the Markets try to pull back. However, having said this, it is important to note that the Markets have attempted to take support twice at 8050-8060 levels and therefore, these levels become very important short term support. It would be critically important for the Markets to trade above this level and breach on the downside will see some more weakness creeping in. If this happens, then the possibility of the Markets testing its 50-DMA cannot be ruled out.

All and all, the Markets continue to remain in consolidation mode and this continues to keep our analysis on similar lines as that of yesterday. The Markets are likely to remain range bound with some amount of volatility remaining ingrained in it. The levels of 8050 should be watched out for and until then all downsides should be utilized to make selective purchases.

Milan Vaishnav,

Consulting Technical Analyst

Member: Market Technicians Association, (MTA), USA
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

Tuesday, June 14, 2016

Daily Market Trend Guide -- Tuesday, June 14, 2016

MARKET TREND FOR TUESDAY, JUNE 14, 2016

While trading very much on expected lines, the Markets yesterday recovered some 50-odd points from the low point of the day but still ended the day with losses. Today, we can once again expect the Markets to open on a modestly negative note and look for directions but the yesterday’s low level of 8063 is likely to hold as support. Though the Markets are expected to continue to remain in corrective mode, it is more likely to remain range bound as well.

For today, the levels of 8130 and 8175 will act as immediate resistance levels for the Markets. The supports come in at 8060 and 8010 levels.

The RSI—Relative Strength Index on the Daily Chart is 55.7400 and it has just reached its lowest value in last 14-days which is bearish. The RSI has set a fresh 14-period low while NIFTY has not yet and this is bearish divergence. The MACD too has reported a negative crossover and it is now bearish as it trades below its signal line. On the Candles, a falling window (gap) has occurred. This occurring with the previous two candles also being black, makes charts little weaker.

On the derivative front, the NIFTY June futures have shed over 7.28 lakh shares or 3.39% in Open Interest. The NIFTY PCR stands at 1.11 as against 1.12.

Coming to pattern analysis, the Markets are now showing signs of correction after a stupendous 450+ points of up move. After making an immediate top at 8294, the Markets have shown some corrective tendency. If we draw a trend line from the lows it made in February, the Markets may see some 50-100-odd points of modest downsides left before it attempts of find foot again. With this, the levels of 8000 may be important to watch out for. If the current levels are breached, then the Markets testing the 50-DMA cannot be ruled out.

Overall, in the scenario described above, in any case, there will be no structural breach on the Charts even if the Markets tests its critical supports mentioned above. It would be a healthy correction and most of the dips will be bought into. We continue to reiterate to use all upsides until the levels of 8294 to book and protect current profits. Shorts should be avoided but as the Markets are likely to continue to see a range bound consolidation and movements.