Gemstone Equity Research & Advisory Services

Tuesday, January 17, 2017

Daily Market Trend Guide -- Tuesday, January 17, 2017

MARKET OUTLOOK FOR TUESDAY, JANUARY 17, 2017

The Indian Equities spent a range bound session and continued to consolidate at Close levels as the benchmark NIFTY50 ended the Monday’s session with minor gains of 12.45 points or 0.15%. A modestly positive start is expected today and we will see the NIFTY inching once again towards its 100-DMA levels. The 100-DMA level which stands at 8439 today will remain important level to watch out for at Close levels. The zones of 8440-8460 will continue to pose area resistance to the Markets.

For today, the levels of 8460 and 8495 will act as immediate resistance levels for the Markets. The supports will come in at 8360 and 8325 levels.

The Relative Strength Index – RSI on the Daily Chart is 66.7407 and it does not show any failure swing. However, the NIFTY50 has formed a fresh 14-period high while RSI has not and this has resulted into Bearish Divergence. The Daily MACD stays bullish and continues to trade above its signal line. No significant formation is observed on Candles.

The NIFTY January futures have added over 2.22 lakh shares or 1.12% in Open Interest. This indicates positive bias and shows that the undercurrent remains buoyant.

The pattern analysis show very clear picture and shows the zones of 7900-7920 being confirmed as the immediate bottom for the Markets. Further it also makes evident that the NIFTY consolidated around 200-DMA and then moved up again. So, this area – 200-DMA – which earlier acted as the resistance will now act as support in event of any range bound consolidation. On the upper side, the 100-DMA remains a critical resistance to watch out for at Close. As projected on couple of occasions, the NIFTY will not show any runaway rise until it moves past 100-DMA and closes well above it.

The overall structure of the Charts throws distinct possibilities of consolidation happening for some more time. On one hand, the NIFTY has added OI while coming off from its lows which is a sign of underlying positive bias; and on the other hand, the lead indicators are showing mild signs of fatigue. We reiterate that the stock specific approach will hold the key in coming days and all the intermittent dips should be continued to be utilized to make quality purchases.

Milan Vaishnav, CMT

Technical Analyst

(Research Analyst, SEBI Reg. No. INH000003341)

Member:

Market Technicians Association, (MTA), USA

Canadian Society of Technical Analysts, (CSTA), CANADA

www.EquityResearch.asia

http://milan-vaishnav.blogspot.com

+91-98250-16331

milan.vaishnav@equityresearch.asia

milanvaishnav@yahoo.com

Daily Market Trend Guide -- Monday, January 16, 2017

MARKET TREND FOR MONDAY, JANUARY 16, 2017

We had expected NIFTY50 to test its 100-DMA and also resist around those levels in the Friday’s session. While trading very much on analyzed lines, the NIFTY did test its 100-DMA level and then came off from its opening highs to end the day with a minor loss of 6.85 points or 0.08%. The Monday’s session is likely to see a quiet opening and we very much expect the Markets to continue to consolidate at Close levels. The 8440-8460 zones will now become critical to watch out for and they are likely to pose resistance in the immediate short term. The consolidation is expected to remain range bound with limited downsides.

For today, the levels of 8460 and 8495 will act as immediate resistance levels while supports are expected to come in at 8355 and 8320 levels.

The Relative Strength Index – RSI on the Daily Chart is 66.0148 and it does not show any bullish or any bearish divergence or any failure swings. The Daily MACD is bullish while trading above its signal line. No significant formation is observed on Candles.

On the derivatives front, the NIFTY January futures have shed over 7.29 lakh shares or 3.53% in Open Interest. This shedding of OI with the NIFTY coming off its highs indicates that there are high chances that some amount of profit taking has crept in and this may force the NIFTY to consolidate for some time.

Pattern analysis also indicates some amount of likely consolidation on the Daily Charts. After breaking out from the 200-DMA levels, NIFY has gained some 100-odd points and has recovered some 500-odd points from the recent lows formed near 7900-7920 zones. This pullback has of course occurred with intermittent consolidation, but some amount of minor profit taking at higher levels cannot be ruled out. For the NIFTY50 to resume its upward move, it will have to move past and Close above 100-DMA which stands at 8441 today. Until this happens we will see some amount of range bound consolidation happening in the immediate short term.

In the same breath, it is important to note that the Weekly Charts remain relatively more buoyant. So, if we translate its effect on the Daily Charts, it is likely that though consolidation might happen and the area of 8440-8462 might act as immediate resistance levels, the downsides will remain limited on Close basis. Some volatility is likely to remain ingrained in the Markets and we may see NIFTY50 oscillating in a defined trading range. Any intermittent bouts and profit taking should be utilized to pick quality stocks. Individual stock specific approach is advised for the day.