Daily Market Trend Guide -- Friday, August 28, 2015

MARKET REPORT                                                                                          August 28, 2015

Very much on expected lines, the Markets saw a sharp technical pullback yesterday as it opened positive, got stronger and ended the day with decent gains. Following positive global cues, the Markets saw a positive opening and traded with capped gains in the morning trade. The Markets got stronger as it surged ahead in the afternoon trade to form the day’s high of 7963.60. The Markets formed this high in the afternoon trade and thereafter again traded in sideways trajectory. The Markets spent the major part of the second half of the session in the sideways trajectory and maintained its gains. The session remained much stable than expected and the Markets finally ended the day at 7948.95, posting a net gain of 157.10 points or 2.02% while forming a higher top and higher bottom on the Daily Bar Charts.

MARKET TREND FOR FRIDAY, AUGUST 28, 2015

Today as well, in absence of any negative global inputs, the Markets are likely to continue with its technical pullback. It is very much likely that the Markets see a gap up opening today and on similar lines that of yesterday, it would be critical for the Markets to maintain the opening gains. The gap created between 8060 and 8225 will pose resistance for the Markets on the upside.

For today, the levels of 8000 and 8060 are immediate resistance on the Charts. The supports come in at 7860 levels.

The RSI—Relative Strength Index on the Daily Charts is 35.6019 and it has just moved above from its oversold zone. It is neutral as it does not show any bullish or bearish divergence or any failure swings. The Daily MACD however continues to remain bearish as it trades below its signal line.

On the derivative front, the NIFTY September futures have added over 43.38 lakh shares or 25.97% in Open Interest. The September series have begun with PCR of 0.94 as against 0.74 yesterday. There has been considerable amount of short covering yesterday accompanied with modest fresh longs.

Coming to pattern analysis, technically speaking the zones of 7960-8000 were likely to act as major resistance for the Markets while it pulls back. The reason was that it was a major triple bottom pattern support that the Markets broke on the downside and therefore it was expected to act as resistance. However, today’s gap up opening is likely to cause the Markets to open above these levels and therefore, it would be critical for the Markets to maintain levels above this. On the way up, the gap created between 8060-8225 will continue to offer resistance for the Markets for couple of days.

All and all, gap up opening expected again today but it is also likely that more of short covering continues. It would be important that we see more amount of fresh buying coming in as well as it would be essential for the Markets to maintain itself above 8000-levels in coming sessions. It is also likely that we see some paring of gains later in the day but more or less the gains are likely to be maintained. Overall, modest exposures with cautious optimism are advised for the day.

Milan Vaishnav,
Consulting Technical Analyst

Af. Member: Market Technicians Association, (MTA), USA
Af. Member: Association of Technical Market Analysts, (ATMA), INDIA
www.EquityResearch.asia
http://milan-vaishnav.blogspot.com

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