Daily Market Trend Guide -- Tuesday, January 12, 2016

MARKET REPORT                                                                             January 12, 2016

The Markets made a fresh 52-week low today while it opened with a gap down and later ended the day with modest losses while recovering from the low point of the day. The Markets saw a gap down opening following global weakness and worsened Chinese sentiments and opened below the triple bottom support and 52-week low of 7540. The Markets made its intraday low of 7494.35 in the morning trade while it traded in a capped range. The morning trade saw the Markets making some feeble attempts to recover but continued to resist to 7540 on its way up. It traded sideways in the afternoon trade while continuing to resist to the levels of 7540 which it broke. However, the second half saw the Markets attempting a rebound once again. It went past this level and went on further to form the day’s high of 7605.10. It came off a bit from those levels and finally ended the day at 7563.85, posting a modest loss of 37.50 points or 0.49% while forming a lower top and lower bottom on the Daily Bar Charts.

MARKET TREND FOR TUESDAY, JANUARY 12, 2016

Though the Markets survived the scare of the breaching its triple bottom on the Daily Charts yesterday at Close levels, it is still not completely out of the woods. Today’s analysis continues to remain more or less on similar lines as we can expect a quiet and modestly negative start to the Markets. Once again, the levels of 7540 will continue to remain critically important and it would be necessary for the Markets to defend this level and remain above 7540 in order to avoid further weakness.

For today, the levels of 7590 and 7625 will act as immediate resistance levels for the Markets. Supports come in at 7540 and 7470 levels.

The RSI—Relative Strength Index on the Daily Chart is 35.1213 and it does not show any failure swing. However, the NIFTY has formed a fresh 14-period low but RSI has not yet and this is Bullish Divergence. The Daily MACD remains bearish as it trades below its signal line.

On the derivative front, the NIFTY January series have added over 3.50 lakh shares or 1.62% in Open Interest. The NIFTY PCR stands at 0.81 as against 0.82. Though this figure of net OI addition clearly suggest that there has been discomfort with shorts at lower levels, this figure has also appeared with net selling in Cash segment by the FIIs.

Coming to pattern analysis, the Markets breached the levels of 7540 yesterday. This level is an important major triple bottom pattern support and also the 52-week low for the Markets. By breaching this level, the Markets formed its fresh 52-week low yesterday of 7494. However, it is critically important to note that this breach was an intraday breach and the Markets have managed to close above this. Therefore, this level of 7540 continues to remain an important level to watch and it would be of paramount importance for the Markets to keep its head above this level to avoid further weakness from creeping in.

All and all, the Markets continue to oscillate around 7540 levels but for immediate short term we have some chances of the technical pullback. However, even with the technical pullback, the Markets will continue to remain in the current intermediate downtrend. Therefore, it is advised to make purchases but on a very limited and selective basis while avoiding shorts for the immediate short term. 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 -- Monday, January 11, 2016

MARKET REPORT                                                                                       January 11, 2016

The Markets ended the day on Friday on a modestly positive note but it did so in a range bound and capped session. The Markets saw a decent opening and formed its intraday high of 7634.10 in the early morning trade. However, soon after recording these levels, the Markets pared nearly all of its opening gains. It remained in a falling trajectory and at one point of time pared nearly all of its opening gains to trade flat. The second half of the session saw some pullback coming in as the Markets attempted to recover its morning gains. It did manage to recover most of the morning gains which it had at the time of opening. The Markets went very near to its opening levels but in the end came off a bit. It finally settled the day at 7601.35, posting a net gain of 33.05 points or 0.44% while forming a lower top but higher bottom on the Daily Bar Charts.

MARKET TREND FOR MONDAY, JANUARY 11, 2016

The Markets have witness a reluctant and mild pullback on lower volumes on Friday. Today, we are poised at a critical juncture wherein we are placed with two distinctly possibilities. Today’s opening is slated to be on a lower note and there are all chances that the Markets will test its 52-Week lows and might even breach that. Today, if we see a opening below the levels of 7540, then this level is likely to remain resistance for the rest of the day. However, if we see it opening on or around this level, we may expect the Markets to show some resilience going ahead in the session.

For today, the levels of 7630 and 7655 will remain immediate resistance for the Markets. The supports come in at 7540 and 7475 levels.

The RSI—Relative Strength Index on the Daily Chart is 36.8363 and this remains neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD stands bearish as it trades below its signal line. On the Weekly Charts, RSI is 40.2140 and it does not show any failure swing. However, the NIFTY has set a fresh 14-period low while Weekly RSI has not and therefore it is Bullish Divergence on Weekly Charts. Weekly MACD stays bearish as it trades below its signal line.

On the derivative front, the NIFTY January futures have added 36,375 shares in Open Interest. This remains a very negligible addition and we can fairly consider that OI has stands unchanged leaving much of the short positions open in the Markets.

Coming to pattern analysis, the Markets have taken a faint support at the triple bottom formation on the Daily Chart. This support levels happens to be the 52-Week lows of 7540 and the Markets have taken support thrice from the month of September till date. Today’s opening is likely to remain very crucial. Opening on or around 7540 and  managing to stay above it will see the Markets remaining resilient to the overall global weakness in the immediate short term. The European Markets too are now “oversold” on Daily Charts and they might also witness some technical pullback as well. Owing to this, the chances of our Markets showing resilience below 7540 levels remains possible. However, any breach below 7540 will see some more weakness creeping into the Markets.

All and all, owing to the given scenario described above, the levels of 7540 and the behavior of the Markets vis-à-vis this level will be important to watch out for. It would be critically important for the Markets to try and keep its head above 7540 and do now show any significant breach to avoid further weakness. It is advised to refrain from making aggressive purchases and maintain adequate liquidity while adopting 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
milan.vaishnav@equityresearch.asia
milanvaishnav@yahoo.com