Daily Market Trend Guide -- Monday, January 11, 2016

MARKET REPORT                                                                                       January 11, 2016

The Markets ended the day on Friday on a modestly positive note but it did so in a range bound and capped session. The Markets saw a decent opening and formed its intraday high of 7634.10 in the early morning trade. However, soon after recording these levels, the Markets pared nearly all of its opening gains. It remained in a falling trajectory and at one point of time pared nearly all of its opening gains to trade flat. The second half of the session saw some pullback coming in as the Markets attempted to recover its morning gains. It did manage to recover most of the morning gains which it had at the time of opening. The Markets went very near to its opening levels but in the end came off a bit. It finally settled the day at 7601.35, posting a net gain of 33.05 points or 0.44% while forming a lower top but higher bottom on the Daily Bar Charts.

MARKET TREND FOR MONDAY, JANUARY 11, 2016

The Markets have witness a reluctant and mild pullback on lower volumes on Friday. Today, we are poised at a critical juncture wherein we are placed with two distinctly possibilities. Today’s opening is slated to be on a lower note and there are all chances that the Markets will test its 52-Week lows and might even breach that. Today, if we see a opening below the levels of 7540, then this level is likely to remain resistance for the rest of the day. However, if we see it opening on or around this level, we may expect the Markets to show some resilience going ahead in the session.

For today, the levels of 7630 and 7655 will remain immediate resistance for the Markets. The supports come in at 7540 and 7475 levels.

The RSI—Relative Strength Index on the Daily Chart is 36.8363 and this remains neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD stands bearish as it trades below its signal line. On the Weekly Charts, RSI is 40.2140 and it does not show any failure swing. However, the NIFTY has set a fresh 14-period low while Weekly RSI has not and therefore it is Bullish Divergence on Weekly Charts. Weekly MACD stays bearish as it trades below its signal line.

On the derivative front, the NIFTY January futures have added 36,375 shares in Open Interest. This remains a very negligible addition and we can fairly consider that OI has stands unchanged leaving much of the short positions open in the Markets.

Coming to pattern analysis, the Markets have taken a faint support at the triple bottom formation on the Daily Chart. This support levels happens to be the 52-Week lows of 7540 and the Markets have taken support thrice from the month of September till date. Today’s opening is likely to remain very crucial. Opening on or around 7540 and  managing to stay above it will see the Markets remaining resilient to the overall global weakness in the immediate short term. The European Markets too are now “oversold” on Daily Charts and they might also witness some technical pullback as well. Owing to this, the chances of our Markets showing resilience below 7540 levels remains possible. However, any breach below 7540 will see some more weakness creeping into the Markets.

All and all, owing to the given scenario described above, the levels of 7540 and the behavior of the Markets vis-à-vis this level will be important to watch out for. It would be critically important for the Markets to try and keep its head above 7540 and do now show any significant breach to avoid further weakness. It is advised to refrain from making aggressive purchases and maintain adequate liquidity while adopting highly cautious outlook on the Markets.

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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