Daily Market Trend Guide -- Tuesday, September 08, 2015

MARKET REPORT                                                                           September 08, 2015

We had categorically mentioned that the Markets faces the chances of selling off from any pullback and yesterday’s session remained precisely on those dotted lines. The Markets saw a positive and better than expected opening in the morning and traded with modest gains in the early morning trade. At one point of time, it perked up and formed the day’s high of 7705.05 in the first hour of the trade. It was in the late morning trade that the Markets witnessed vulnerability at higher levels. It gradually pared all of its gains and traded modestly in the negative. Until late afternoon trade, the Markets traded more or less in sideways trajectory trading in a capped and narrow range. The last hour of the trade saw some more weakness creeping in and the Market slid further to form the day’s low of 7545.90, sliding nearly 160-odd points from the high point of the day. It finally ended the day at 7558.80, posting a net loss of 96.25 points or 1.26% while continuing to form a lower top and lower bottom on the Daily Bar Charts.

MARKET TREND FOR TUESDAY, SEPTEMBER 08, 2015

Today, we can fairly expect the Markets to open on a modestly positive note and attempt / show some technical pullback. However, it is very important to note that given the weak technical fabric of the Markets, any pullback that we see today, or in immediate short term, will more be attributed to short covering. For the Markets to form solid base and bottom we need buy volumes and this is what it has been missing since last couple of session. With any pullback, the Markets continue to remain vulnerable to sell-off from higher levels.

For today, the levels of 7610 and 7650 will act as immediate resistance for the Markets. The supports come in at 7540 and 7510 levels.

The RSI—Relative Strength Index on the Daily Chart is 29.3788 and it now once again trades in “oversold” territory. Though it does not show any failure swing, it certainly shows Bullish Divergence as the NIFTY has formed a fresh 14-day low but RSI has not. The Daily MACD continues to remain bearish as it trades below its signal line.

On the derivative front, the NIFTY September futures have added over 3.77 lakh shares or 

1.63% in Open Interest indicating fresh addition of shorts. The NIFTY PCR stands at 0.95 as against 0.96 yesterday.

Coming to pattern analysis, the description remains more or less on similar lines. The Markets failed to fill up the gap it created in  August and decline further to fall past its previous lows. Today, on back of addition of short positions in the system and the Markets getting oversold on Daily Chart see some short covering coming in. However, it would take more for the Markets to form a base and potential bottom at these levels. For the Markets to form base at these levels, it will have to show pullback not just on short covering but also on fresh buying coming in. Recently, the Markets have also been falling on back of very less supportive buy volumes over and above the selling pressure that it witnesses.

All and all, the Markets still remain in doldrums and any pullback that is likely today should not be construed as a bottom formation unless the Markets shows definite signs for that. So far as fresh purchases go, the medium term investors can start deploying some 20.30% of their available funds while sitting mainly on cash. Overall, even with some solid technical pullback, utmost caution is advised at higher levels.

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
milan.vaishnav@equityresearch.asia
milanvaishnav@yahoo.com

Daily Market Trend Guide -- Monday, September 07, 2015

MARKET REPORT                                                                             September  07, 2015

The Markets continued to wear a bearish undertone once again on Friday following weak technicals as it opened lower and weakened further to end the day with losses. Markets opened lower on expected lines following global weakness and spent the morning session trading in sideways trajectory while continuing to trade with losses. The Markets remained more or less in sideways trajectory in a very narrow range making no attempts to recover in the first half of the session. The second half saw some more weakness creeping in as the Markets slipped further to testing its previous lows and forming the low point of the day at 7626.85. No major recover was seen and the Markets finally settled the day at 7655.05, posting a net loss of 167.95 points or 2.15% while forming lower top and lower bottom on the Daily Bar Charts.

MARKET TREND FOR MONDAY, SEPTEMBER 07, 2015

Expect the Markets to open on a modestly negative note and look for directions. The Markets currently have a bearish technical structure but there are two things that can cause a temporary technical pullback. First, it trades near important short term support zone and second; the Markets are currently nearly oversold. However, the overall build up of the Markets on technical charts show strong possibilities of any technical pullback getting sold into.

For today, the levels of 7710 and 7740 will act as immediate resistance levels for the Markets. The supports come in at 7620 and 7550 levels.

The RSI—Relative Strength Index on the Daily Chart is 31.5977 and trades very near to oversold territory. It does not show any failure swing but the NIFTY has formed as fresh 14-day low but RSI has not and this is bullish divergence. The Daily MACD continues to remain bearish as it trades below its signal line. On the Weekly Charts, the Weekly RSI is 33.7965 and it has reached its lowest value in last 14-days which is bearish. It does not show any bullish or bearish divergence. The Weekly MACD  is bearish as it trades below its signal line.

On the derivative front, the NIFTY September futures have added over 5.06 lakh shares or 2.23% in Open Interest. This point towards addition of shorts in the derivative segment. The NIFTY PCR stands at 0.96 as against 0.99 on previous day.

Coming to pattern analysis, the Markets are struggling to find base near current support levels. After forming lows of 7667 on 25^th August, the Markets did pulled back. However, it retraced again after it failed to fill up the gap it created on 21^st August. The gap still persists and the zone above 7960-8000 will continue to pose considerable resistance to the Markets in days to come. Currently the Markets may attempt a pullback given its nearly oversold condition. Another reason that can cause a pullback is that the Markets are attempting to take support on 100-DMA on the Weekly Charts as well. However, given the lead indicators and the F&O data, we still have the possibility of any good technical pullback being sold into.

All and all, the Markets currently trade at very good and important short term support levels. There are chances that post modestly negative opening, we may see some improvement in the Markets as we go ahead in the session. If the Markets continue to retrace, it would get oversold temporarily and therefore some technical pullback cannot be ruled out. It is advised to continue to stay away from taking any major exposures as the bottoms have not been found even on temporary basis. Heavy caution is advised in the Markets today even if it attempts to pullback.

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
milan.vaishnav@equityresearch.asia
milanvaishnav@yahoo.com