Gemstone Equity Research & Advisory Services

Thursday, December 22, 2016

Daily Market Trend Guide -- Thursday, December 22, 2016

MARKET TREND FOR THURSDAY, DECEMBER 22, 2016

The Markets had a disappointing session as it failed to maintain its modest gains and ended with modest losses for the sixth day in a row. The NIFYT came off from its modest highs in the last hour of the trade ending with losses. Today as well, we continue to expect the session to remain lackluster and we will see NIFTY moving around in a capped range. With holiday season weighing around, the volumes too are expected to remain thin and the 200-DMA level which is 8238 will continue to remain key resistance for the NIFTY in the immediate short term.

For today, the levels of 8115 and 8180 will remain immediate resistance levels for the Markets. The supports come in at 8030 and 7980 levels.

The RSI—Relative Strength Index on the Daily Chart is 39.9257 and no failure swings are observed. The NIFTY has formed yet another fresh 14-period low while RSI has not yet. This has shown “Bullish Divergence” for the second day in a row. The Daily MACD remains bullish as of now as it trades above its signal line. However, if such trend continues, we might see it reporting negative crossover. No significant formations on Candles are observed.

On the derivative front, the NIFTY December series have gone on to shed yet another 1.31 lakh shares or 0.91% in Open Interest. This makes evident that reduction / offloading of positions has continued though with a lesser ferocity.

While having a look at pattern analysis, the NIFTY has so far held on to the recent lows made at 7928. However, while it has attempted to confirm this bottom and mark a reversal, it has not done so today. Though this bottom stands protected, it does not stand confirmed. The very fact that the NIFTY has failed to sustain above 200-DMA, makes it vulnerable to some more continued weakness in immediate short term.

However, the fact that retracements are come in on much lower volumes should not be ignored. There are chances that the NIFTY may continue to see such modest declines but also now start seeing intermittent pullbacks from higher levels as it still trades above its key supports and these key supports have not been broken as yet. We continue to advise to refrain from creating any major directional exposures. Some pockets like IT, ENERGY, and select CNXMID50 stocks are likely to out-perform.

Milan Vaishnav, CMT

Technical Analyst

(Research Analyst, SEBI Reg. No. INH000003341)

Member:

Market Technicians Association, (MTA), USA

Canadian Society of Technical Analysts, (CSTA), CANADA

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, December 21, 2016

Daily Market Trend Guide -- Wednesday, December 21, 2016

MARKET TREND FOR WEDNESDAY, DECEMBER 21, 2016

Indian Equity Markets had yet another list-less session as it continued to post modest losses while dealing on very low volumes. The NIFTY opened modestly positive but ended with a minor loss after coming off from its intraday lows. Today, our analysis remains more or less on similar lines once again. We can expect a flat to modestly positive opening in the Markets. However, the intraday trajectory that the Markets form will be critical to decide the trend for today. The fact that the NIFTY trades below its 200-DMA is important and this level will continue to remain a crucial levels to watch out for.

For today, the levels of 8145 and 8190 will act as immediate resistance levels for the Markets. The supports come in at 8050 and 8010 levels.

The RSI—Relative Strength Index on the Daily Chart is 41.4173 and it shows no failure swings. However, the NIFTY has set a fresh 14-day low while RSI has not and this has formed “Bullish Divergence” on Daily Charts. The Daily MACD remains bullish as it trades above its signal line. No major / significant formation on Candles is seen.

On the derivatives front, the NIFTY December futures have shed over 1.64 lakh shares or 1.13% in Open Interest. Though the ferocity has died down but still unwinding / offloading of positions remains evident in the Markets.

Coming to pattern analysis, the NIFTY has failed to confirm the recent lows of 7928 that it has formed recently. It has managed to pullback and attempted to form a higher high in order to confirm this bottom but it has not been able to do this so far and this remains an area of concern in the immediate short term. The fact that it has not able to sustain above 200-DMA which stands at 8232 today is also important and it would be critically important for the NIFTY to move past this level as this is likely to pose itself as a major pattern resistance.

Taking all this into account, we should also not discount one fact that the undercurrent remains very much positive and there is not structural breach on the Daily Charts. Though the weakening Rupee remains a cause of concern, the yields remaining under control and other signals thrown back by lead indicators and overall structure of the Charts continue to keep our inherent view bullish .Though NIFTY may decline a bit but it would remain under very low volumes. It is continued to be reiterated that one should continue to make moderate and stock specific purchases with every minor downsides while maintaining a cautious view on the Marktes.