Gemstone Equity Research & Advisory Services

Sunday, February 19, 2017

Daily Market Trend Guide -- Wednesday, February 15, 2014

MARKET TREND FOR WEDNESDAY, FEBRUARY 15, 2017

The Indian Equity Markets continued to fiercely consolidate for the sixth day in a row and went on to once again end the day with minor loss of 12.75 points or 0.14%. Today, as we open, there are all chances of a modestly negative opening. Despite great amount of strength is displayed at Close levels, the NIFTY also faces the surge in the US Dollar with its trading at a 3-week high and the spike in the Treasury Bond Yields. With these readings, we can also not dismiss the fact that the NIFTY still continues to trade in overbought territory. This can continue to infuse volatility once again in the session. There are chances that we may see some pressure in the opening trade but also display resilience as we go ahead in the session. The behavior of the Markets vis-à-vis the levels of 8230 will continue to remain immensely important.

For today, the levels of 8230 and 8900 will continue to act as immediate resistance levels for the Markets. Supports come in lower at 8730 and 8650 are expected to act as immediate supports.

The Relative Strength Index – RSI on the Daily Charts is 71.5783 and it remains neutral showing no bullish or bearish divergence. The Daily MACD is still bullish while trading above its signal line. But it is now evidently moving towards reporting a negative crossover. No significant formation on the Candles is observed.

The NIFTY February futures have added yet another over 10.32 lakh shares or 4.63% in Open Interest.

While having a look at pattern analysis, we can see the strong consolidation happening on the Daily Charts at Close levels. In the last six days, we have seen NIFTY ending with minor changes but the sessions have witnessed good amount of volatility with NIFTY oscillating quite a bit on either side. Normally such behavior is interpreted as strong undercurrent.

However, taking into account global technical indicators such as strengthening of the US Dollar and the spike in the US Bond yields, we cannot rule out the possibility of the NIFTY continuing to remain in such consolidation for some more time. In the present circumstances, the levels of 8220-8230 will remain very critical levels to watch out for.

All and all, we can expect a subdued opening and might see some negativity in the initial trade but at the same time, we cannot rule out some resilience coming at play. Such behavior is likely to induce volatility in the session. Any sustainable up move shall occur only after the NIFTY moves past the 8220-8330 zones and until this happens we will continue to see volatile oscillations of the NIFTY in a defined range. While remaining light on the overall positions, cautious outlook is advised for the day.

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 -- Tuesday, February 14, 2014

MARKET TREND FOR TUESDAY, FEBRUARY 14, 2017

The Markets ended fifth day in a row under fierce consolidation while it ended with nominal gains of 11.50 points or 0.13% post seeing a remarkable recovery from the lows of the Day. The NIFTY50 is witnessing strong consolidation on Close basis with flat endings while oscillating in a broad range on intraday basis. While this indicates very strong undercurrent, it has also established 8820-8830 zones as its immediate very short term resistance. With each passing day under consolidation, Markets are increasing its chances of a sharp move on both side and any movement past 8820-8830 zones will see some more up move despite the fact that the Markets continue to trade in overbought trajectory.

For today, the levels of 8830 and 8900 will continue to act as major immediate resistance levels while supports come in at 8730 and 8675 levels.

The RSI—Relative Strength Index on the Daily Chart is 73.3871 and it does not show any failure swing. It continues to trade in “overbought” terrain and also reports a Bearish Divergence as the NIFTY has set a fresh 14-period high while RSI has not. The Daily MACD is still bullish while trading above its signal line but as mentioned in our previous notes as well, it is moving towards reporting a negative crossover post flattening its trajectory. On the Candles, a long lower shadow occurred. This formation resembles a hanging man baring the fact that it has some upper shadow as well. Such formations often cause the Markets to consolidate while halting its up move. Such and similar formations have occurred couple of times over past five sessions and has caused the Markets to undergo strong consolidation after pausing the up move.

The NIFTY February futures have added over 6.32 lakh shares or 2.92% in Open Interest. This signifies buoyant undercurrent in the Markets.

The pattern analysis show quite distinctive and classical consolidation on the Daily Charts.

On the Closing basis, the Markets have remained nearly flat in last five days by posting nominal gains or losses and remaining more or less flat. While intraday, the sessions have remained quite volatile in a broad range as it saw NIFTY oscillating on either side. Such behavior often signifies strong undercurrent in the Markets and after spending some time under such congestion, Markets usually makes and upward move.

Overall, if the NIFTY moves past 8820-8830 zone, it may see some more up move towards 8900-mark despite the fact that it trades overbought. Strong Markets tend to get overbought and remain overbought for some time. However, the behavior of the Markets vis-à-vis the levels of 8820-8830 zones and the intraday trajectory that it forms during the day will be critical to watch out for. The strong global equity set up is likely to aid the attempt of our Markets to move up. However, given the overbought nature of the Markets, fresh purchases may be made but also guarded equally vigilantly at higher levels.