Daily Market Trend Guide -- Monday, October 26, 2015

MARKET REPORT                                                                                   October 26, 2015

The Markets spent the Friday’s session in a 40-odd point narrow range as it opened higher but failed to capitalize much on the higher opening but ended with modest gains. The Markets saw a positive opening as expected but formed its intraday high of 8328.10 in the early minutes of the trade. Thereafter, instead of attempting to capitalize and making a stronger up move, the Markets transformed itself in to more or less sideways trajectory and made a moderately downward sloping channel. Though no major paring of gains was witnessed, at the same time, the Markets did not make any further up move as well. Markets slowly drifted downwards and formed its intraday low of 8280.75 by late afternoon trade, but never dipped into the negative. It finally settled the day at 8295.45, posting a modest gain of 43.75 points or 0.53% while forming a higher top and higher bottom on the Daily Bar Charts.

MARKET TREND FOR MONDAY, OCTOBER 26, 2015

While tracking positive global cues, the Markets are all likely to see a modestly positive opening but the analysis continue to remain more or less on similar lines. The reason being, any modest up moves from here will see the Markets approaching its 200-DMAs and at the same time, we also enter the expiry week of the current derivative series. All this is likely to keep the Markets in consolidation or it may also make the Markets oscillate in a volatile manner and oppose any runaway moves in the Markets.

For today, the levels of 8320 and 8380 shall act as immediate resistance levels for today. The supports come in at 8280 and 8220 levels.

The RSI—Relative Strength Index on the Daily Chart is 63.6655 and it has reached its highest value in last 14-days which is bullish. It does not show any bullish or bearish divergence. The Daily MACD remains bullish as it trades above its signal line. On the Weekly Charts, the Weekly RSI is 51.9606 and it is neutral as it shows no bullish or bearish divergence or any failure swings. The Weekly MACD has reported a positive crossover and is now bullish as it trades above its signal line.

On the derivative front, the NIFTY October futures have shed over 5.17 lakh shares or 2.72% in Open Interest. The NIFTY PCR stands at 1.06 as against 1.05 on Friday.

While having a look at pattern analysis, one good thing that has happened over previous week is that the Markets have “filled up” the gap, though slowly and gradually, that was created in the first week of the September when Markets witnessed severe gap-down openings. Having said this, it was important as such gaps tend to create formidable “areas of resistance” for the Markets. Even if the Markets do not make any immediate runaway rise, it is likely to maintain its overall pattern supports without showing any significant downsides.  The lead indicators on the Daily and Weekly Charts certainly show positive bias however, the rollover activities can make the Markets oscillate bit longer.

Overall, while having a look at both Weekly and Daily Charts, the inherent buoyancy is evident and this is also supported by lead indicators as well. So, while keeping this in mind, it is strongly advised to refrain from creating any fresh short positions. However, the rollover activities can keep the Markets in congesting and make in oscillate with some amount of volatility. In given circumstances, we continue to reiterate our view of protecting profits at higher levels and utilizing dips for making quality purchases.

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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