Daily Market Trend Guide -- Thursday, February 25, 2016

MARKET REPORT                                                                               February 25, 2016

Markets opened negative and ended yet another day with losses as caution weighed high ahead of Union Budget due to come up on Monday. The Markets witnessed a negative opening. It opened bit worse than expected but spent the morning trade moving in sideways trajectory with limited losses. Though it lost some more ground, the afternoon trade saw an attempt to recover as the Markets managed to recoup some of its losses. When at one point when the Markets traded with only marginal losses, the second half of the trade did most of the undoing for the Markets. The Markets started to lose ground on accelerated note and went on to form the day’s low of 7009.75. No recovery was seen and the Markets finally settled the day at 7018.70, posting a net loss of 90.85 points or 1.28% while forming a lower top and lower bottom on the Daily Bar Charts.

MARKET TREND FOR THURSDAY, FEBRUARY 25, 2016

Markets are likely to see a flat opening once again and look for directions. It poises itself at critical juncture as today remain a expiry day of current February series. At the same time, it faces three important events as well. Railway Budget comes up later in the day today, Economic Survey tomorrow and Union Budget on Monday. The technical structure shows throws mixed indications as though they wear a moderately bearish undertone, at the same time, they are unlikely to make fresh 52-week lows until there is some drastically wrong with Budget proposals.

For today, the levels of 7075 and 7120 are immediate resistance levels for the Markets. The supports come in at 6990 and 6930 levels.

The RSI—Relative Strength Index on the Daily Chart is 36.9588 and it remains neutral as it shows no bullish or bearish divergence or failure swings. The Daily MACD still remains bullish as it trades above its signal line.

On the derivative front, NIFTY has reported 55% rollovers so far. The February series shed over 29.80 lakh shares or 20.80% in Open Interest whereas the March series added over 39.56 lakh shares or 38.73% in Open Interest. The NIFTY PCR stands at 0.68 as against 0.75 yesterday.

Coming to pattern analysis, in lines with what we mentioned often in our previous editions, the Markets have reacted sharply from 7240 levels. These levels are now continuing to act as resistance as it was the support that the Markets breached on the downside. Having said this, the Markets are unlikely to breach the levels of 6869, the 52-week lows that it has formed couple of sessions back. The reasons are manifold. First, the volumes have declined; second, the PCR stands at one of the lowest levels in recent times indication of unwinding of decrease in overall Put positions. However, in event of three major events that the Markets face, the Markets are expected to hold 6869 levels as support on the downside unless something goes wrong drastically with the Union Budget proposals.

Overall, all is certainly not well with the Markets are the Markets have shown no signs of confirmation of any formation of the bottom so far. At the same time, a look solely at the technicals of the Markets suggests less possibilities of making fresh bottoms. However, at the same time good amount of volatility will remain ingrained in the Markets as the Markets will have a lot to reach to the events coming up in next three days. We continue to reiterate to refrain from any significant exposures and adopt 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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