Thursday, May 5, 2016

Daily Market Trend Guide -- Thursday, May 05, 2016

MARKET TREND FOR THURSDAY, MAY 05, 2016
We continue to keep today’s analysis on more or less on similar lines. The Markets have continued its moderate drift over couple of days and is likely to continue to do so. Today, we can once again see the Markets opening on a quiet note and look for directions. Some up move can be seen but it would be extremely important to see if the Markets are able to sustain any intermediate up moves. The intraday trajectory of the Markets would be important to watch out for.


For today, the levels of 7750 and 7810 will act as immediate resistance for the Markets. The supports come in at 7675 and 7610 levels.

The RSI—Relative Strength Index on the Daily Chart is 47.3244 and it has reached its lowest value in last 14-days which is bearish. It does not show any bullish or bearish divergence. 
The Daily MACD remains bearish as it trades below its signal line.

On the derivative front, the NIFTY May futures have shed over 6.03 lakh shares or 3.05% in Open Interest. This certainly suggest offloading / unwinding of long positions in the Markets. The NIFTY PCR stands at 0.82 as against 0.86.

Coming to pattern analysis, the Markets have continued to drift steadily after it’s broke its 140-odd point trading range which had support at its 200-DMA which stands at 7840. This level, i.e. 200-DMA will continue to pose resistance to the Markets in the immediate short term until the  Markets move past this level. Having said this, if the weakness persists, the Markets are likely to test its pattern support at 7675 levels. If this level is breached, we will see some more weakness creeping into the Markets. On the up side, they are likely to remain capped in a limited range.  Any weakness will not rule out the possibility of the Markets testing 7550 levels wherein multiple supports converge.

Overall, we may see some stability returning to the Markets. However, there are chances that this remains a temporary affair and any up moves may get possibly sold into. The lead indicators read along with the F&O data suggest that we may continue to see some more weakness in the immediate short term and any respite from this, if any, will remain temporary. Fresh buying may be done at lower levels but at the same time, profits should be protected with every up move.


Milan Vaishnav,
Consulting Technical Analyst

Member: Market Technicians Association, (MTA), USA
Member: Association of Technical Market Analysts, (ATMA), INDIA

+91-98250-16331

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