Gemstone Equity Research & Advisory Services

Monday, June 15, 2015

Daily Market Trend Guide -- Monday, June 15, 2015

MARKET REPORT June 15, 2015

The Markets held on to the Thursday’s level on Friday as well as it moved in a range bound manner remaining bit volatile and ended the day with modest gains while the levels of 8000 continued to act as resistance. The Markets saw negative opening and formed its intraday low of 7940.30 in the early moments of the trade. It crawled into the positive territory after some time and in the afternoon trade reached its highest point of the day at 7995.60. The Markets never maintained any directional bias and moved in either direction remaining ranged bound. The Markets did not sustain this level as well and by late afternoon trade pared all of those gains to dip into negative again. The last hour of the trade saw some spurt from lower levels as the Markets again managed to move into the positive territory. It finally settled the day at 7982.90, posting a modest gain of 17.55 points or 0.22% while forming a lower top and lower bottom on the Daily Bar Charts.

MARKET TREND FOR THURSDAY, JUNE 15, 2015

We continue with the direction of analysis that we had put forth on Friday. Today, we can expect the Markets to open on a quiet note and again look for directions. However, again, there are chances that the Markets attempts to move past 8000-levels and moves back into the trading range. However, until this happens, this level will continue to pose major resistance as well. We had mentioned some potential signs of bottom formation in our Friday’s edition. These are likely to be aided with the stable inflation data and sharply better IIP data that we got on Friday post Market hours.

For today, the levels of 8000 and 8075 are likely to act as important resistance. The supports come in at 7942 and 7880 levels.

The RSI—Relative Strength Index on the Daily Chart is 36.1212 and this remains neutral without showing any failure swings or any bullish or bearish divergence. The Daily MACD remains bearish as it trades below its signal line. On the Weekly Charts, the Weekly RSI is 40.3076 and it has reached its lowest value in last 14-weeks which is bearish. However, it does not show any bullish or bearish divergence. The Weekly MACD remains bearish as it trades below its signal line.

On the derivative front, the NIFTY June futures have added over 66,950 shares in Open Interest. This at least signifies that the spurt that we saw on Friday was not on account of any short covering.

Coming to pattern analysis, the Markets continues to trade within its filter of 8000-level support. There are chances that the Markets will attempt to crawl back inside the broad trading range. However, the level of 8000 will continue to act as major resistance and it would be crucial for the Markets to move past that level. Until this happens, the Markets would continue to remain in theoretical dangers of some more immediate short term weakness.

Overall, though high degree of caution should continue to prevail, we can expect at least some attempts by the Markets to move back into the broad trading range. However, the resistance level of 8000 would be crucial and it would be imperative for the Markets to move past 8000-levels. The Markets would also set it eyes on the WPI inflation date coming up later today. Overall, with the Markets critically poised, continuation of cautious outlook is advised for today.

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

Friday, June 12, 2015

Daily Market Trend Guide -- Friday, June 12, 2015

MARKET REPORT June 12, 2015

Markets had a terribly disappointing session as it gave away more than it had gained in the previous session to end the day with a deep cut. The Markets saw a stable opening on expected lines and formed its intraday high of 8163.05 in the early minutes of the trade. It remained in positive territory briefly in the morning trade. It was in the late morning trade and thereafter that bearish grip took hold of the Markets as it slowly pared all of its gains and dipped into the negative. It remained in the session pressure until the end of the session which also intensified at the later stage. The Markets went on to breach the psychological 8000-mark to form the day’s low of 7958.25. No major recovery was seen and it finally ended the day at the lowest levels since October last year at 7965.35, posting a net loss of 159.10 points or 1.96% while forming a higher top but lower bottom on the Daily Bar Charts.

MARKET TREND FOR FRIDAY, JUNE 12, 2015

Markets have ended the day yesterday at the lowest point of the day. Technically speaking, it is likely to open on a modestly positive note and trade positive in the initial trade. However, there appear faint chances as indicated by lead indicators and the F&O data that the Markets may not significantly move down from current levels. There are faint chances that the Markets may once again attempt a pullback while holding on to the current support levels.

The levels of 8000 and 8075 are immediate resistance for the Markets. The supports exists much lower at 7940 and 7875 levels.

The RSI—Relative Strength Index on the Daily Chart is 34.9029 and it does no show any failure swing. However, the NIFTY has made a fresh 14-day low while RSI has not. This is Bullish Divergence. Daily MACD remains bearish while it trades below its signal line. Further on the Candles, An engulfing bearish line occurred (where a black candle's real body completely contains the previous white candle's real body). If the engulfing bearish pattern occurs during a downtrend (which appears to be the case with NIFTY), it may be a last engulfing bottom which indicates a bullish reversal. The test to see if this is the case is if the next candle closes above the bottom the current (black) candle's real body. Therefore, this needs confirmation.

On the derivative front, NIFTY June futures have added over 11.85 lakh shares or 7.67% in Open Interest. This very clearly suggests that significant short positions have been added. NIFTY PCR stands at 0.83.

Coming to pattern analysis, the Markets have breached its short term double bottom support of 8000. Primarily speaking, this is likely to induce some more weakness in the Markets. However, having said this, there are still faint hopes that the Markets may hold this levels at Close as they still trade within its filter. Further, the lead indicator also indicates a mild bullish divergence while may not allow the Markets to offer any significantly more downside. Candles also show a potential bottom formation. However, all these need confirmation.

All and all, the Markets certainly not out of the woods and might see some more temporary weakness, at least in the initial trade. However, factors like heavy addition in Open Interest indicating shorts, bullish divergence on the lead indicator, and signs of a potential bottom formation on the Candles, offer some hope of a technical pullback even if the Markets continue to remain in an overall downtrend. Cautious outlook should be continued for the day.