Daily Market Trend Guide -- Tuesday, February 16, 2016

MARKET REPORT                                                                              February 16, 2016

Markets saw a very sharp short covering led pullback and ended the day with smart gains after a day of stable up move. The Markets saw a gap up opening following strong Asian Markets. After opening gap-up, the Markets successfully sustained its gains as it saw a one-way stable rally as the Markets kept forming fresh intraday highs during the day. While pulling towards its logical expected levels of 7240, Markets remained in upward rising trajectory throughout the day. Since the up move was sustained, it formed its intraday high of 7182.80 towards the end of the session in the final hour of the trade. The levels were maintained and the Markets finally ended the day at 7162.95, posting a decent gain of 182 points or 2.61% while forming a sharply higher top and higher bottom on the Daily Bar Charts.

MARKET TREND FOR TUESDAY, FEBRUARY 16, 2016

Markets witnessed a very sharp technical pullback yesterday. Today as well, we can expect a fairly positive start to the Markets and they are likely to continue with its yesterday’s pullback. Having said this, we again refer to our yesterday’s edition wherein we had mentioned that the logical target and resistance to the Markets may occur at 7240 levels. 

Today’s opening is likely to see the Markets trading around these levels and it would be critically important to see the behavior vis-à-vis these levels.

For today, the levels of 7240 and 7275 will act as immediate resistance levels for the Markets. The supports exist at 7110 and 7045 levels.

The RSI—Relative Strength Index on the Daily Chart is 39.2295 and it remains neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD remains bearish as it trades below its signal line.

On the derivative front, the NIFTY February futures have shed over 4.01 lakh shares or 1.93% in Open Interest. This confirms some amount of short covering in the Markets. The NIFTY PCR stands at 0.805 as against 0.78.

While having a look at pattern analysis, the Markets breached its previous 52-week low of 7240 levels and this level is likely to act as resistance on its way up. The Markets, with its extent of expected positive opening will open very near to this level and it would be critically important to how it reacts around 7240. Some amount of consolidation / mild selling cannot be ruled out at 7240 and beyond. The Markets, though they have pulled back very sharply, have not confirmed its bottom formation as yet and it continues to remain vulnerable to sell-offs at higher levels. Further, even if it continues to pullback beyond 7240 for some time, it would continue to remain in overall downtrend as it is yet to form a definite bottom and confirm it.

Overall, with the Markets likely to continue to show upticks in the initial trade, it is advised to make fresh purchases on highly selective basis and at very moderate levels. Since the directional bias is not established because what we are seeing are mere technical pullbacks, the exposures should be limited to quality stocks with very high vigil at higher levels.  With a view to maintain liquidity and to keep exposures at modest levels, positive caution is advised for the day.

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, February 15, 2016

MARKET REPORT                                                                                  February 15, 2016

Markets had a deeply volatile session on Friday as it plunged to its fresh 52-week lows but recovered during the day to end flat with nominal gains. The Markets saw a modestly positive opening but this opening was bit weaker than what it was expected. After briefly trading into the green the Markets slipped into negative territory. By the first half of the session, the Markets had made its fresh 52-week lows as it formed its day’s low of 6869. However, the second half of the session saw bit of short covering coming in. The Markets attempted to recover and at one point recovered all of its losses to trade in the positive territory. It also went on to form the day’s high of 7034.80. After hovering around those levels, it came off a bit and settled the day at 6980.95, posting a minor gain of 4.60 points or 0.07% but continued to form a sharply lower top and lower bottom on the Daily Bar Charts.

MARKET TREND FOR MONDAY, FEBRUARY 16, 2016

We had pointed out in our Friday’s edition that the Markets may find a short term bottom for themselves. Though fresh intraday lows were observed in Friday’s session but at Close levels, the Markets have ended flat. Today, we can expect the Markets to open on a decently positive note and continue with its pullback that it initiated in the second half of the Friday’s session. However, once again, sustenance of opening gains and the key levels of 7240 would be the two critical things to watch out for in coming sessions.

For today, the levels of 7030 an 7045 will act as immediate resistance levels for today. The support would come in at 6920 and 6875 levels.

The RSI—Relative Strength Index on the Daily Chart is 28.0910 and though it does not show any bullish or bearish divergence or failure swings, it trades in “oversold” territory. The Daily MACD is bearish as it trades below its signal line. On Candles, a long lower shadow occurred which often signals bullish reversal for immediate short term if it occurs near support levels or when a security is “oversold”.  On the Weekly Charts, the Weekly RSI is 31.0747 and it has reached its lowest level in last 14-weeks which is bearish. It does not show any bullish or bearish divergence. The Weekly MACD is bearish as it trades below its signal line.

On the derivative front, the NIFTY February futures have added further over 10.71 lakh shares or 5.43% in open interest indicating further addition of short positions in the Markets.

Coming to pattern analysis, the Markets have tested one of the most important levels in recent times. On Friday, it took intraday support at 200-DMA on the Weekly Charts. It saw a sharp short covering rally once it tested those levels. It is important to note that this is one of the major pattern support and if breached on the lower side will take the Markets into quite good amount of bearish mode for the immediate short term. Coming back to analysis on Daily Chart, the Markets breached the levels of 7240, its previous 52-week low while on its way down. While pulling up, its logical resistance will be the levels of 7240. This level will be the important level to watch out for.

All and all, the Markets are likely to open positive and continue with its pullback. If the pullback continues in the immediate short term, the immediate resistance levels for the Markets will be 7240. It is likely that the Markets pullback strongly and finds resistance at 7240. It is important to note that the Markets may face pullback as it has once again attempted to find a bottom but it will show no signs of confirmation even if it sustains the pullback today. Given this fact, though selective purchases may be made, extremely caution is advised at higher levels for today and days to come.

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