Daily Market Trend Guide -- Friday, October 16, 2015

MARKET REPORT                                                                              October 16, 2015

The Markets had a buoyant session yesterday as it ended the day with decent gains after better than expected opening. Though positive opening was expected, the Markets saw a stronger opening and traded sideways in a narrow range in the morning trade. The late afternoon trade saw the Markets getting stronger. The Markets continued to maintain these gains and continued to trade in a narrow range and in sideways trajectory. Some more strength was seen coming in as the Markets went on to form its intraday high of 8190.55 by late afternoon trade. It came off a bit from its highs but more or less went on to maintain its gains while resisting to its 100-DMA. The Markets finally ended the day at 8179.50, posting a net gain of 71.60 points or 0.88% forming a higher top and higher bottom on the Daily Bar Charts.

MARKET TREND FOR FRIDAY, OCTOBER 16, 2015

Markets have resisted to their 100-DMA yesterday and has halted its up move there. Today, with modestly positive opening expected, the Markets will open near their key pattern resistance levels of 100-DMA and therefore this level along with another major pattern resistance will continue to test the strength of the Markets. The Markets continue to remain vulnerable to weakness around these pattern resistances and therefore their behaviour vis-à-vis these levels would be important to watch out for.

For today, the levels of 8210 and 8240 will act as important resistance for the Markets. The supports come in lower at 8130 and 8070 levels.

The RSI—Relative Strength Index on the Daily Chart is 58.7669 and it remains neutral as it does not show any bullish or bearish divergence or any failure swings. The Daily MACD continues to remain bullish while trading above its signal line.

On the derivative front, the NIFTY October futures have added over 3.38 lakh shares or 1.71% in Open Interest. This shows the continuing display of inherent strength of the Markets even while consolidating. The NIFTY PCR stands unchanged at 1.00

Coming to pattern analysis, the Markets have been now consolidating for over a week after some six days of straight gains and adding nearly 460-odd points from the immediate lows. Having said this, this consolidation is taking place after the Markets cleared one important pattern resistance and now oscillates between the to major pattern resistances. The upper end of these pattern resistances is it’s 100-DMA of the Markets and the upper end of the gap that the Markets created in the first week of September. As mentioned in our previous edition of the Daily Market Trend Guide any fresh sustainable up move shall occur only after the Markets moves past these two major pattern resistances.

All and all, the Markets still continue to oscillate in a range and continue to remain in consolidation. Fresh up moves shall occur only beyond 8230-8240 levels and until that happens we will continue to see the Markets oscillating in a broad range. Today, with the Markets expected to open near its resistance levels, it would be important to see the intraday trajectory that the Markets forms because at these levels it still remain vulnerable to profit taking. Overall, while maintaining liquidity, selective and stock specific approach is advised with cautious outlook 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

+91-98250-16331
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