Daily Market Trend Guide -- Thursday, September 24, 2015

MARKET REPORT                                                                                September 24, 2015

Markets fared exactly as analyzed in our yesterday’s edition as it opened much lower but recovered during the rest of the session to end the day with modest gains. The Market saw a near gap down opening following weak global cues and formed its intraday low of 7723.25 in the early minutes of the morning session. Though the Markets did spent some time trading in a sideways range but then converted itself into rising trajectory and remained so throughout the session. The Markets spent the first half of the session recovering most of its gains and traded near its previous close by then. The second half also saw the Markets strengthening further as it went on to rise and formed its intraday high of 7882.90. It came off from those levels but finally ended the day at 7845.95, posting modest gain of 33.95 points or 0.43% while forming a lower top and lower bottom on the Daily Bar Charts.

MARKET TREND FOR THURSDAY, SEPTEMBER 24, 2015

Today, we enter the expiry day of the current derivative series and just like previous two sessions, the Markets are likely to remain dominated with rollover centric activities. Speaking purely on technical terms, the Markets are slated to open on a modestly lower note and look for directions. There are chances that we may see some weakness persisting but overall, the Markets are likely to trade in a given broad range with some possibilities of volatility remaining ingrained in the Markets following rollovers.

For today, the levels of 7880 and 7930 will act as immediate resistance levels for the Markets. The supports come in at 7790 and 7730 levels.

The RSI—Relative Strength Index on the Daily Chart is 44.7841and it remains neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD remains bullish as it continues to trade above its signal line.

On the derivative front, rollovers continued as the NIFTY September series shed over 24.17 lakh or 13.61% in Open Interest. The October series added over 22.61 lakh shares or 18.46% in Open Interest. Overall, net open interest reduction of over 1.56 lakh shares was seen. This once again signifies that there was a short covering form lower level in the Markets.

Coming to pattern analysis, the Markets have attempted to form a base near 7700-levels and have attempted to pullback form there. However, it is extremely important to note that the Markets have shown just faint indication of possible bottom formation but in no way it has shown any confirmatory signs. This continues to keep the Markets in a broad trading range and also it continues to keep Markets below its key resistance zone of 7960-8000 levels. This structure on the technical chart continues to keep the Markets vulnerable to selling bouts from higher levels.

Overall, the Markets may see a stable opening and it can even see some improvement as we go ahead in the session. However, the expiry is likely to keep the Markets volatile and the technical factors will continue to keep the Markets vulnerable from sell offs at higher levels. However, given the feeble signs of bottom formation that the Markets have shown, we continue to reiterate to refrain from creating any short positions in the Markets. While utilizing downsides to make very moderate purchases, continuation of cautious approach 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 -- Wednesday, September 23, 2015

MARKET REPORT                                                                          September 23, 2015

After opening stable and trading with capped gains the Markets took a terribly bearish overturn as it weakened significantly in the seconde half of the day and ended the day with deep losses. The Markets saw much better than expected opening and formed its high point of the day at 8021.60 in the early morning trade. Thereafter, the Markets traded sideways with capped gains though it never really looked weak. However, it was the second half that did most of the undoing of the Markets. The second half saw the Markets getting suddenly weak and saw a violent selling pressure. It saw a near vertical paring of gains and went on to form the day’s low of 7787.75, paring nearly 234-odd points from the high point of the day. Minor recovery was seen at all in the end and the Markets finally ended the day at 7812, posting a net loss of 165.10 points or 2.07% while forming a higher top but sharply lower bottom on the Daily Bar Charts.

MARKET TREND FOR WEDNESDAY, SEPTEMBER 23, 2015

We refer to our edition of Daily Market Trend Guide dated September 21^st, wherein we had mentioned the strong possibility of the gap being filled in by the Markets. The technically weak markets retraced and yesterday filled up that gap on the downside. Today as well, we are likely to see a weaker opening in the Markets and the Markets are expected to trade with losses in the initial trade. However, we also enter the penultimate day of expiry of current derivative series and the session will remain dominated with rollovers.

For today, the levels of 7820 and 7875 will remain immediate resistance levels for the Markets. The supports will come in at 7750 and 7710 levels.

The RSI—Relative Strength Index on the Daily Chart is 43.0976 and it remains neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD stands bullish as it still continues to trade above its signal line.

On the derivative front, the NIFTY September series shed over 13.50 lakh shares or 7.06% in Open Interest whereas the October series added over 54.61 lakh shares or 80.44% in Open Interest. This figure shows a massive rollover of shorts as net addition of Open Interest by over 41 lakh shares. The NIFTY PCR stands at 0.95 as against 1.00 yesterday.

Coming to pattern analysis, we had very categorically mentioned that the upward rising gap was created on September 20^th. This being a common area gap does not hold much significance on the upside and is likely to get filled. The Markets have retraced for the two days following that and has filled up that gap. The Markets are attempting to form a base around these levels. Today’s opening is likely to  be a weaker opening and baring some 50-75 odd points volatility from current levels, there are mild signs that the Markets may form a bottom and may prepare some ground work required for a sustainable pullback.

Overall, following this technical situation on the Daily Charts, as we mentioned earlier, weak opening is nearly imminent and at the same time, baring some 50-75 odd points volatility, the Markets may attempt to form a base around these levels. Given this fact, we strongly reiterate now to stay away from creating any fresh short positions. Any dip that we may see should be utilized to make fresh purchases. However, until attempts to find bottoms are seen, these purchases should be kept limited and cash should be preserved.

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