Daily Market Trend Guide -- Friday, February 05, 2016

MARKET REPORT                                                                                    February 05, 2016

Markets faced little volatile session yesterday and as apprehended in our yesterday’s edition, the Markets struggled to maintain is gains while it managed to end with modest gains. The Markets saw a decently positive opening but after trading with capped gains in a capped range, it pared some of its opening gains in the morning trade. However, the first half of the session saw the Markets remaining in upward rising trajectory and saw itself strengthening while it formed its intraday high of 7457.05. However, second half did most of the undoing for the Markets once again paring nearly all of its gains. While losing nearly all of its gains the Markets saw a modest pullback in the final hour of the trade and finally settled the day at 7404, posting a modest gain of 42.20 points or 0.57% while forming a slightly higher top and higher bottom on the Daily Bar Charts.

MARKET TREND FOR Friday, February 5, 2016

The Markets are likely to see a flat opening and is likely to trade in a capped range in the initial trade today. The Markets have been tentative and are likely to remain so in the immediate short term as the levels of 7540 have acted as a fierce resistance post pullback and will continue to act as resistance as well in the immediate short term. The intraday trajectory that the Markets form would be critical to watch out for post flat opening. Though the Markets continues to make attempt form a bottom, it continues to remain vulnerable to sell-offs at higher level as well.

For today, the levels of 7450 and 7505 will act as immediate resistance levels for the Markets. The supports come in at 7400 and 7330 levels.

The RSI—Relative Strength Index on the Daily Chart is 41.9102 and it is neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD remains bullish as it trades above its signal line.

On the derivative front, the NIFTY February futures have shed over 5.53 lakh shares or 2.85% in Open Interest. The reduction in Open Interest indicates that some amount of unwinding was seen from higher levels yesterday.

Coming to pattern analysis, the structure of the Markets remains similar to what we have explained in our recent past editions. The Markets forms a triple bottom and a descending triangle and it breached the critical supports of 7540 and made recent lows of 7250 in recent past. From there, the Markets attempted to form a bottom, pulled back but the levels of 7540 continued to pose a fierce resistance to the pullback. Though the  Markets have retraced once again some 200-odd points, it is yet to show any definite signs of any confirmation of bottom formation.  At the same time, with the Markets trading below 7540, this level will continue to act as important resistance to the Markets on its way up. Until the Markets moves past this level and beyond, it will continue to remain vulnerable to intermittent sell-offs from higher levels.

All and all, the Markets have shown modest gains yesterday but it is still not completely out of the woods and the structure continues to have a bearish undertone. No sustainable run-away up move shall occur in the Markets until Markets moves past certain critical levels. Until this happens, it may continue to oscillate in a broad trading range and would also remain vulnerable to sell-offs at higher levels. 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

Daily Market Trend Guide -- Thursday, February 04, 2016

MARKET REPORT                                                                              February 04, 2016

Though the Markets opened lower following global weakness, it showed some resilience during the most part of the trading session but ended yet another day with losses following last hour deepening of cuts. The Markets saw a near gap down opening while taking cue from the Asian markets but for the entire morning session and for the most part of the afternoon trade, it exhibited good amount of resilience. Though the Markets continued to remain in a very capped range, it had remained in slightly upward rising trajectory while attempting to recover most of its opening losses. However, the last hour of the trade did most of the undoing as the Markets slipped and saw a near-vertical decline once again and went on to form the day’s low of 7350.30. It finally settled the day at 7361.80, posting a net loss of 93.75 points or 1.26% while forming a sharply lower top and lower bottom on the Daily Bar Charts.

MARKET TREND FOR THURSDAY, FEBRUARY 04, 2016

After the Markets have shaved off over 200-odd points in last three sessions, we are likely to see some respite from the weakness that we have been seeing recently. We can expect the Markets to open on a fairly stable note. However, there are two things that we need to take note of. One, it would be critically important for the Markets to sustain expected opening gains and; two, the levels of 7540 will continue to pose major resistance in the immediate short term.

For today, the levels of 7410 and 7445 will act as immediate resistance for the Markets. The supports come in at 7320 and 7250 levels.

The RSI—Relative Strength Index on the Daily Chart is 38.9922 and it remains neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD continues to remain bullish as it trades above its signal line.

On the derivative front, the NIFTY February futures have added over 1.29 lakh shares or 0.67% in Open Interest. This indicates creation of some minor shorts in the system.

If we take a look at pattern analysis, we have been mentioning in our previous editions that what we have seen is a mere technical pullback and there have been no signs of “confirmation” of bottom. This keeps us vulnerable to selling bouts from higher levels. This happened precisely as the Markets resisted near 7540 levels and came off over 200-odd points from there. As of now, though the Markets are expected to take support around these levels and it is not expected to make fresh lows but until a definite bottom is formed and confirmed, the Markets will continue to remain vulnerable to selling bouts from higher levels and the levels of 7540 will continue to act as immediate resistance for the Markets.

Overall, though the Markets are expected to see a decently positive opening, it would be important to see if it sustains this and is able to capitalize on it. In any case, with the levels of 7540 acting as important resistance levels, the Markets are likely to oscillate in a broad range and will see some amount of volatility remaining ingrained in the Markets. While avoiding over-exposure in the Markets cautious outlook should be continued 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