Daily Market Trend Guide -- Friday, January 08, 2016

MARKET REPORT                                                                                     January 08, 2016

Getting mercilessly affected by weak global cues, NIFTY too ended the day with a deep cut after opening with a gap down. The Markets experienced Chinese jitters along with its Asian peers and opened on with a gap down. The Markets opened precisely at the important pattern support and immediately slipped below it. For the rest of the session, that pattern support levels remained resistance as the Markets reported day’s high of 7674.95. The Markets remained under constant pressure throughout the session. At no point did the Markets showed any inclination to take support or rebound. It remained in downward falling trajectory for the entire day and formed the day’s low of 7556.60, nearly testing its 52-day low again. It finally settled the day at 7568.30, posting a net loss of 172.70 points or 2.23% while forming a sharply lower top and lower bottom on the Daily Bar Charts.

MARKET TREND FOR FRIDAY, JANUARY 08, 2016

The Markets are poised at a very critical juncture. Today, we can expect a quiet opening in the Markets and also a mild technical pullback cannot be ruled out. However, at the same time, it is also important to note that the Markets nearly tested its 52-low support yesterday by trading just a whisker away from those levels. This level is a all important triple bottom support and any breach of these levels will induce weakness in the Markets.

For today, the levels of 7620 and 7645 are immediate resistance levels for the Markets. Supports come in at 7540 and 7420 levels.

The RSI—Relative Strength Index on the Daily Chart is 34.2071 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 is bearish as it trades below its signal line. On the Candles, A falling window occurred (where the bottom of the previous shadow is above the top of the current shadow).  This usually implies a continuation of a bearish trend.  There have been 5 falling windows in the last 50 candles--this makes the current falling window even more bearish.  The two candles preceding the falling window were black, which makes this pattern even more bearish. Three black candles occurred in the last three days.  Although these candles were not big enough to create three black crows, the steady downward pattern is bearish.

On the derivative front, the NIFTY January series have added over 7.60 lakh shares or 3.65% in Open Interest. The NIFTY PCR stands at 0.85 as against 0.84 yesterday.

While coming to pattern analysis, the Markets formed yesterday’s low point very near to the 52-week lows of 7540 levels. It nearly tested these levels and thereby has taken support at a triple bottom formation. This is one of the major pattern supports for the Markets. Any breach below these levels will cause some good amount of weakness to creep in the immediate short term.  Though we can expect a flat opening today, it would be very important for the Markets to trade above 7540 levels.

All and all, though we can expect a flat opening in the Markets and even some amount of technical pullback, the Markets are not completely out of the woods. The protection of levels of 7540 will be of critical importance for the Markets.  It is advised to refrain from creating any fresh positions even in event of a mild technical pullback. Overall, continuance 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

+91-98250-16331
milan.vaishnav@equityresearch.asia
milanvaishnav@yahoo.com

Daily Market Trend Guide -- Thursday, January 07, 2016

MARKET REPORT                                                                                           January 07, 2016

Weakness persisted on expected lines in the Markets as it gave up after a flat session to end the day with losses. The Markets saw a modestly negative start and traded with capped losses in the morning trade. In the later part of the morning trade, it managed to recover modest losses to trade back in the positive for a brief period. The major part of the session was spent trading in a very narrow and capped range in sideways trajectory. The Markets posted some minor gains while it formed its intraday high of 7800.95. However, once again, the last hour and half of trade saw most of the undoing of the Markets. The Markets rapidly pared its gains almost in vertical manner and went on to form the day’s low of 7721.80, losing nearly 80-odd points from the high point of the day. It finally settled the day at 7741, posting a net loss of 43.65 points or 0.56% while forming a lower top and lower bottom on the Daily Bar Charts.

MARKET TREND FOR THURSDAY, JANUARY 06, 2016

The Markets are poised for a gap down opening following weakness in the Asian peers due to rout in the Chinese Markets. We will not stay unaffected as the technical factors on the Daily Charts too remain weak. We will see the Markets opening gap down and remain with bearish undertone in the initial trade. However, there are faint chances that the Markets improve going ahead in the session but at the same time, it is likely to test and breach its logical pattern support of 7680 if the opening weakness persist.

For today, the levels of 7760 and 7785 will act as immediate resistance for the Charts. The support exist at 7730 and 7650 levels.

The RSI—Relative Strength Index on the Daily Chart is 42.8643 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 has reported a bearish crossover and is now bearish as it trades below its signal line.

On the derivative front, the NIFTY January series have added over 99375 shares or 0.48% in Open Interest. This figure, singularly speaking, remains negligible. However, there has been significant unwinding seen in the Cash segment along with existing shorts in the F&O segment.

Coming to pattern analysis, the Markets have breached its important pattern support of 7820-7840 range which exists in form of a rising trend line. Following that, the same levels acted as resistance as the highs of the days following the breach are below that rising trend line. Following weak opening which is almost imminent today, these resistance levels remain sacrosanct and we will continue to see weakness continuing in the Markets. If weakness persists and if the Markets show no signs of improvement, it is logically likely to test the other important pattern support zone of 7650-7680 range. Though it is not likely to happen immediately but any breach of these levels will see serious weakness creeping into the Markets in the immediate short term.

Overall, the outlook for today looks thoroughly bearish as gap down opening remains imminent. Over and above that, even if we see some improvement as we go ahead in the session, the same is likely to remain temporary as the Markets will continue to trade below its key resistance levels. Overall, it is advised to avoid any fresh purchases and maintain cautious to negative outlook on the Markets 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

+91-98250-16331
milan.vaishnav@equityresearch.asia
milanvaishnav@yahoo.com