Daily Market Trend Guide -- Wednesday, January 27, 2016

MARKET REPORT                                                                                   January 27, 2016

Markets gave up its initial gains after a decent opening and ended the day with minor gains after remaining in downward trajectory throughout the day. The Markets saw a decently positive opening and after this it inched up further in the morning trade to form the day’s high at 7487.15 in the early morning trade. After trading in a sideways a sideways trajectory in a capped range, the Markets pared its opening gains. It transformed itself in downward trajectory and remained so throughout the day. By late afternoon trade, the Markets had pared all of its gains to trade flat. However, it settled the day at 7436.15, posting minor gains of 13.70 points or 0.18% while forming a higher top and higher bottom on the Daily Bar Charts.

MARKET TREND FOR WEDNESDAY, JANUARY 27, 2016

The Markets will open today after a holiday yesterday on account of Republic Day. Today we are likely to see somewhat positive opening but the analysis would continue to remain same as that of Monday. It would be critically important to see if the Markets are able to build up on the possible positive opening today. Further, we enter the penultimate day of the expiry of the current series and the session is therefore likely to remain dominated with rollover centric activities.

For today, the levels of 7480 and 7540 will act as immediate resistance for the Markets. The supports come in at 7420 and 7375 levels.

The RSI—Relative Strength Index on the Daily Chart is 40.8150 and it remains neutral as it shows no bullish or bearish divergences of any failure swings. The Daily MACD remains bearish as it trades below its signal line. However, in coming sessions, if the Markets consolidate or puts up some gains, we can fairly expect a positive crossover.

On the derivative front, rollovers continued as the NIFTY January series shed over 32.82 lakh shares or 17.76% in Open Interest. The February series added over 31.77 lakh shares or 65.90% in Open Interest. There was some net shedding of Open Interest seen on Monday.

Coming to pattern analysis, the Markets have attempted to find a bottom at 7250 levels after breaching the very important support of 7540. It becomes important to note that the Markets, if they continue to pull back, its logical levels where the pullback should be arrested is the 7540 levels.  The reason is that is level is likely to act as resistance as this was the major support that the Markets breached on the downside. Further to this, it also becomes important to note that even if the Markets manage to pullback up to the levels of 7540, it would still continue to remain in a overall downtrend. The pullback so far has not yet resulted into reversal of trend.

Overall, given this scenario, we continue to reiterate to avoid shorts and continue to make selective purchases. However, these purchases should be kept a moderate levels and any upside should be used to vigilantly protect profits. Overall, continuance of cautious outlook is advised 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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