MARKET TREND FOR THURSDAY, NOVEMBER 10, 2016
The Markets had a remarkably nasty and extremely volatile
session while it recovered over 430-odd points from the low point of the day
though it ended the day with losses. We refer to our note yesterday wherein we
had categorically mentioned that equity markets will witness extremely volatility
while it reacts to US Election outcome but at the same time it will continue to
remain guided by broad technicals. Today, as we go ahead in the session, we
will continue to see NIFTY resisting to the falling trend line of the channel has
broke and then further at 100-DMA levels which is 8583 and a critical level to
watch out for.
Today, the levels of 8476 and 8530 will act as immediate
resistance levels while supports will come in at 8400 and 8350 levels.
The RSI—Relative Strength Index on the Daily Chart is
36.7232 and it does not show any failure swing.
NIFTY has set a fresh 14-period low but RSI has not and this is Bullish
Divergence. The Daily MACD remains bearish while trading below its signal line.
A Big While Candle has occurred. Though there is also a gap that has
occurred, this while candle has occurred near 200-DMA of the NIFTY which is
8112 and therefore this has lent credibility of this support level over the
immediate short to medium term.
On the derivative front, the NIFTY November futures have
added over 6.57 lakh shares or 4.10% in Open Interest. This is clear evidence
that the huge pullback that we saw from opening lows has not only come in back
of heavy short covering but some more longs too seem to have been added.
Coming to pattern analysis, the NIFTY has clearly shown a
downward breach from the falling channel that it has formed since 8938 levels.
The return line (support line) of the channel will now continue to act as
resistance in normal course of business followed further by the 100-DMA. At
this juncture, some important and interesting points need to be taken note of.
NIFTY, with most of its components and other key stocks have taken support at
Close levels either at 100-DMA or its 200DMA speaking on broad terms.
Furthermore, so far as electing of Donald Trump is concerned, it is not likely
to affect negatively to the Fund Inflows into India. Barring some short term
reactions, all developments will remain
in India's favor. First, Trump basically targets China, with regard to mfg
jobs, and Mexico and Philippines which take away low tier it jobs from the US.
This will negatively impact their economies and Markets in particular and therefore,
India stands to remain relatively more favored among Emerging Markets. Also,
with Trump coming, we will NOT see interest rate hike in December, mostly. Further, India and Indonesia are two such
countries whose growth is mainly dependent on domestic consumption. They will
remain minimally effected by Trump regime in the long run.
All and all, volatility will persist in the short term and
while these adjustments happen, we recommend to remain extremely stock-specific
and use all volatile downsides to make select purchases. Though some choppiness
will remain, the short to medium term is not expected to see any more major
downsides. Cautious optimism is advised for the day.
Milan Vaishnav, CMT
Technical Analyst
(Research Analyst, SEBI Reg.
No. INH000003341)
Member:
Market Technicians Association, (MTA), USA
Canadian Society of Technical Analysts, (CSTA), CANADA
Association of Technical Market Analysts, (ATMA), INDIA
http://milan-vaishnav.blogspot.com
+91-98250-16331
