Daily Market Trend Guide -- Thursday, February 18, 2016

MARKET REPORT                                                                                   February 18, 2016

The Markets moved in a quite predictable range today as it oscillated in a given range and ended the day with modest gains. The Markets saw a flat start and did not open as much stronger as was expected. It soon dipped into the negative territory and in the first hour of the trade slipped to the day’s low of 6960.65. The remaining morning session was spent recovering from the lows as the Markets nearly traded flat at one point of time. In the afternoon trade, the Markets slipped a bit again but the last hour and half of trade saw sharp recovery coming in. The Markets went back to trade in positive territory and further went on to form the day’s high of 7123.70. It finally settled the day at 7108.45, posting a net gain of 60.20 points or 0.85% while still forming a lower top and lower bottom on the Daily Bar Charts.

MARKET TREND FOR THURSDAY, FEBRUARY 18, 2016

Today’s analysis continues to remain more or less on similar lines that of yesterday. The markets are likely to see a modestly positive opening but once again, the levels of 7200-7240 will continue to act as resistance zone for the Markets. With no signs of confirming bottoms so far, the behavior of the Markets vis-à-vis these levels would be critical to watch out for. Though, some amount of technical pullback is expected, the Markets continue to remain vulnerable to selling pressures at higher levels.

For today, the levels of 7140 and 7210 will act as immediate resistance levels for today. The supports come in at 7065 and 6990 levels.

The RSI—Relative Strength Index on the Daily Chart is 38.7889 and it remains neutral as it shows no bullish or bearish divergence. The Daily MACD stands bearish as it trades below its signal line.

On the derivative front, the NIFTY February futures have shed 84,150 shares or nominal 0.40% in Open Interest. Going by these figures, we see that still quite good amount of shorts still exist in the system. The NIFTY PCR stands at 0.80 as against 0.78.

While having a look at pattern analysis, we had mentioned yesterday that though the Markets are not expected to breach its previous bottom, it will continue to oscillate in a broad range. Keeping in line with this analysis, the Markets oscillated nearly 100+ points intraday. Today as well, if we expected the Markets to show uptick in the initial trade, it would be continuation of pullback. It becomes important to note that these are technical pullbacks as of now and the Markets have not yet shown any signs of confirmation of bottom so far. The levels of 7200-7240 will remain critical to watch out for. With no signs of bottom formation as yet, the Markets may continue to advance towards these levels but at the same time will remain vulnerable to sell-offs at higher levels as well.

Overall, Markets may open modestly positive and are likely to continue to edge higher. However, with the Markets ruling still below its critical levels, we continue to reiterate our view of cautious outlook on the Markets. Profits, if any, should be vigilantly protected at higher levels and rallies should be used to protect profits until the Markets moves past its critical levels. Continuation of cautious outlook is advised for today.

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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