Daily Market Trend Guide -- Wednesday, September 09, 2015

MARKET REPORT                                                                             September 09, 2015

The oversold markets saw a welcome relief rally yesterday as after a volatile morning trade the Markets ended the day with decent gains. The Markets saw a positive start as anticipated but after initial trade it gave up all of its opening gains to trade flat. This continued for entire morning session as the Markets kept gaining and paring its gains while oscillating in a 50-odd points range. It was in the second half that the Markets finally made up its mind and took a directional bias. It went on to break the day’s trading range and surge upwards. It went on to form the day’s high of 7720.90 by late afternoon trade. It did came off a bit from that levels but finally ended the day at 7688.25, posting a net gain of 129.45 points or 1.71% forming a slightly higher top and bottom on the Daily Bar Charts. 

 

MARKET TREND FOR WEDNESDAY, SEPTEMBER 09, 2015

Markets have seen a wave of short covering yesterday and today as well, we will continue to see upsides in the Markets at least in the initial trade. The Markets are set to open on a higher note and it would be very critically important to see if the Markets maintain their opening gains, especially in the second half. To the most probable extent, the Markets are expected to continue with heavy short covering today as well.

For today, the levels of 7750 and 7835 will act as immediate resistance for the Markets. Supports come in at 7540 levels on the downside.

The RSI—Relative Strength Index on the Daily Chart is 35.8986 and it remains neutral as it shows no failure swings or any bullish or bearish divergence. 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 1.72 lakh shares or 0.73% in Open Interest. This minor addition of open interest shows that apart from massive short covering that we witnessed yesterday, some modest amount of buying too is seen as well. The NIFTY PCR stands at 0.95.

Coming to pattern analysis, the Markets will continue to advance towards its 7960-8000 resistance zone that we have been mentioning in couple of our previous editions. With today’s gap up opening expected, the Markets will be mid-way so far as approaching this zone is concerned and it will not be anything unusual if the Markets continue to see advances towards these levels. Today’s gap up opening and it subsequent up move towards the key resistance zone will not confirm any bottom formation but it will certainly lay some firm ground work for the Markets to form a solid base at current levels. However, to do so, the Markets will see some retracement and then attempt to move up again forming a higher bottom. Until this happens, we will continue to see a ranged trading with some great amount of volatility ingrained in it.

All and all, the Markets shall open higher today and make attempts for a further up move. It would be critically important for the Markets to maintain the opening gains and build up from there. At higher levels, there are chances that we see some profit taking bouts and this will keep good amount of volatility ingrained in the Markets. More emphasis should be laid on protecting profits at higher levels while keeping the fresh purchases highly selective.

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 -- 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