Gemstone Equity Research & Advisory Services

Friday, September 9, 2016

Daily Market Trend Guide -- Friday, September 09, 2016

MARKET TREND FOR FRIDAY, SEPTEMBER 09, 2016

The Markets consolidated with positive bias yesterday as analyzed in our yesterday’s edition and while it ended at 18-month high at Close, the entire IT pack suffered on back of TCS issuing a possible loss of momentum in the BFSI sector. This resulted into opening gap-down losses in all IT stocks which remained throughout the session. Speaking purely on technical terms, we will see the Markets still continue to consolidate while the IT pack may see some technical rebound either today or in coming sessions.

Today, the levels of 8968 and 9025 will continue to act as immediate resistance levels and the supports are expected to come in at 8910 and 8865 levels.

The RSI—Relative Strength Index on the Daily Chart stands at 71.5276 and it once again trades in “overbought” territory. Though it does not show any failure swing, the NIFTY has reported its fresh 14-period high whereas RSI has not. This is Bearish Divergence. The MACD on the Daily Chart still continues to trade above its signal line and is currently bullish.

On the derivative front, the NIFTY September futures have added over 3.43 lakh shares or 1.01% in Open Interest.

Coming to pattern analysis, after forming a high at 8968, NIFTY has been once gain consolidating in a narrow range, very much on expected lines. Such consolidation will continue in coming days as well as the Markets are “overbought” and the lead indicators show bearish divergence indicating temporary fatigue. However, such corrective activity will remain in the form of range bound consolidation and limited declines. On the lower side, the levels of 8720-8750 will continue to led solid support in case of any downsides.

Overall, though the lead indicators continue to remain overbought and show some fatigue, the internal strength in the Markets remain intact and no major downsides are likely. As we had mentioned in our previous editions, sectors like Pharma, Auto and select MidCap have shown exemplary out performance and will continue to do so. Corrective activities will not see any major downsides but intermittent selling bouts and volatility cannot be ruled out. IT stocks may see some technical rebound as the CNXIT stands at 25-month low but displays Bullish Divergence on the Daily Charts. Overall, while avoiding shorts, positive caution is advised for today.

Milan Vaishnav, CMT

Technical Analyst

(Research Analyst, SEBI Reg. No. INH000003341)

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

Thursday, September 8, 2016

Daily Market Trend Guide -- Thursday, September 08, 2016

MARKET TREND FOR THURSDAY, SEPTEMBER 08, 2016

Equity Markets took a breather yesterday while ending on a marginally lower note while continuing to exhibit internal strength. Yesterday’s session saw the Markets consolidating on perfectly expected lines. Today as well, we are likely to see some consolidation happening and we will see the session remaining range bound with a positive bias. The levels of 8968.70 will act as immediate very short term resistance levels for the Markets.

For today, the levels of 8970 and 9025 can act as technical resistance levels while we will see supports coming in at 8885 and 8850 levels.

The RSI—Relative Strength Index on the Daily Chart is 69.9503 and it has just moved below its “oversold” territory from a topping formation. It remains neutral showing no failure swings or any bullish or bearish divergence. The Daily MACD remains bullish while trading above its signal line.

On the derivative front, NIFTY September futures 1.08 lakh shares or 0.32% in Open Interest. The F&O figures clearly demonstrate continuing fund flow and the liquidity fuelling selective purchases.

While having a look at pattern analysis, the Markets retraced after intraday highs of 8968.70 yesterday and this level will continue to act as resistance for the immediate short term. It is expected that the Markets will continue to consolidate before it gathers itself for a fresh further up move. In event of further up move, the Markets are likely to track the upper rising trend line drawn from February lows and this will comfortable aid the Markets testing the 9000-and beyond levels. However, before this some consolidation cannot be ruled out and this will remain in form of intermittent profit taking bouts within a range bound movement.

While we see some consolidation happening, we will continue to witness sector churn within the Markets. Quality midcaps and NIFTY laggards are likely to out-perform and we will continue to see selective purchases happening. Select Mid-caps, Media, Pharma and IT shares are likely to outperform the benchmark.