Daily Market Trend Guide -- Thursday, January 14, 2016

MARKET REPORT                                                                                      January 14, 2016

Markets saw tremendous amount of volatility yesterday after its plunged to a fresh 52-week lows and then recovered later in a V-shaped recovery after swinging 165-odd points on either side. The Markets saw a positive and stable opening and formed its intraday high of 7590.95 in the morning session of the trade. The Markets remained in sideways trajectory in the first hour and half of trade but saw sudden weakness creeping in thereafter. The Markets saw a near vertical fall in the early afternoon trade as it erased all of its morning gains to dip in the negative. It saw sharp weakness being extended as it saw the low point of the day at 7425.80, coming off nearly 165-odd points from the high point of the day. However, it was the late trade that saw an equally sharp recovery and recovered very sharply to trade back in the green. It finally ended the day at 7562.40, posting a modest gain of 52.10 points or 0.69% while forming a similar top but lower bottom on the Daily Bar Charts.

 

MARKET TREND FOR THURSDAY, January 14, 2016

The session is all likely to remain very much volatile today with the levels of 7540 playing the important role once again. Today, we can expect a negative start to the Markets once again. There are two things to consider at this time. With the levels of the lower gap down opening expected, the Markets will once again get nearly oversold and secondly, the opening is likely to be once again below the levels of 7540 and therefore the levels of 7540 will be critical to watch out for once again.

For today, the levels of 7590 and 7645 are immediate resistance levels on the Daily Charts, the supports would exist at 7480 and 7430 levels.

The RSI—Relative Strength Index on the Daily Chart is 37.1729 and it remains neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD stands bearish as it continues to trade below its signal line. On the Candles, a long lower shadow occurred which typically suggests bottom formation for the immediate short term.

On the derivative front, the NIFTY January futures have added over 4.13 lakh shares or 1.90% in Open Interest.  The NIFTY PCR stands at 0.80 as against 0.78 yesterday. It should be noted that in absence of any major net FII sell figure, there is large amount of short position that exists in the system.

Coming to pattern analysis, we can have two types of readings; for the immediate short term and the other one for the medium term. If we take the immediate short term view, we can fairly expect that the Markets will show some amount of resilience at lower levels and we can expect a short – covering led technical pullbacks of the kind we witnessed yesterday. At the same time, the levels of 7540-7600 will continue to act as major resistance zone for the Markets in the immediate medium term. So, there are fair chances that we see resilience at lower levels  in the coming day, but see the Markets consolidating at somewhat higher levels with a negative bias.

All and all, so far as today is concerned, there are mild chances that we see the Markets improving as we go ahead in the session. There are chances that even if the rallies are not supported by major buying, some short covering led rallies can be seen. In event of any downsides, shorts should be avoided and very selective stock specific purchases may be made.  In event of pullbacks, such pullbacks should be utilized to protect profits while maintaining a very 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 -- 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