Daily Market Trend Guide -- Wednesday, January 13, 2016

MARKET REPORT                                                                                      January 13, 2016

What was a better-than-expected start to the Markets fizzled out during the day as the Markets made fresh 52-week lows and ended the day with losses. The Markets saw a positive opening and formed its intraday high of 7588.30 in the early trade. The Markets traded with capped gains in the morning trade but it remained positive only for a brief period. It slipped slowly into negative territory by late morning trade. It hovered around the 7540-mark but gradually slipped below that as well. It continued to drift gradually and by late afternoon trade, it formed its day’s low at 7487.80. It traded sideways in the last hour of the trade but made no attempts to recover. It finally settled the day at 7510.10, posting a net loss of 53.55 points or 0.71% while forming a lower top and lower bottom on the Daily Bar Charts.

MARKET TREND FOR WEDNESDAY, JANUARY 13, 2016

Markets are likely to see a decently positive opening today following stable Global Markets. However, at this juncture, we would like to add a word of caution. To begin with, today’s expected opening levels will see the Markets opening just above 7540 levels. These are important triple bottom support which the Markets broke on its way down yesterday. Therefore, it would be critically important for the Markets to build up on today’s expected opening gains.

For today, the levels of 7540 and 7575 will act as immediate resistance levels. The supports come in at 7470 and 7410 levels.

The RSI—Relative Strength Index on the Daily Chart is 32.7747 and it has reached its lowest value since last 14-days which is Bearish. However, it does not show any bullish or bearish divergence. The Daily MACD stays bearish as it trades below its signal line. On the Candles, Bullish Engulfing Pattern has occurred. If this occurs during a downtrend (which appears to be the case with NIFTY), it may be a last engulfing bottom which indicates a bullish reversal.  The test to see if this is the case is if the next candle closes above the bottom the current (black) candle's real body.

 

On the derivative front, the NIFTY January futures have shed over 1.70 lakh shares or 0.78% in Open Interest. The NIFTY PCR stands at 0.78 as against 0.81 yesterday.

Let us have a look at the pattern analysis. The Markets had the levels of 7540 as its critical triple bottom support and it was also its 52-week low. The Markets breached this levels twice and yesterday it has closed below this critical support but have stayed within its filter. The Markets are very near to being oversold. Also, the Global Markets were oversold much before this and they have been witnessing a technical pullback. Though this does not have direct technical relevance but the temporary buoyant global markets will have some sentimental effect and we could also see some mild technical pullbacks. Today’s expected positive opening will see the Markets opening around or little above 7540 levels and it would be critically important to see the behaviour of the Markets vis-à-vis the levels of 7540.

All and all, it remains important to note that even if we see technical pullback and see the Markets pulling back a percent or a percent and a half, it would remain a mere technical pullback. The overall structure as of today continues to remain weak and therefore, every up move that we see should be utilized to protect profits.  We continue to advise to keep purchases heavily stock specific and selective while continuing to maintain a 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

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