Daily Market Trend Guide -- Friday, February 26, 2016

MARKET REPORT                                                                                February 26, 2016

Though the Markets ended with losses for the third day in a row, the session remained relatively less volatile given the expiry day today. The Markets saw a quiet opening, much on expected lines. After opening flat, the Markets slipped into negative for a brief time in the morning trade. However, it crawled back into green soon after that. It spent the morning session trading with minor gains while it formed its intraday high of 7034.50 while remaining in overall very capped and sideways trajectory. In the second half, the Markets saw some paring of gains once again. It slipped back into negative and kept making fresh gradual lows. By late afternoon trade, the markets went on to from the day’s low of 6964.10. It finally ended the day at 6970.60, posting a net loss of 48.10 points or 0.69% while forming a lower top and lower bottom on the Daily Bar Charts.

MARKET TREND FOR FRIDAY, February 26, 2016

Going strictly by numerical sense, the Markets had a fresh 52-week low on Closing Levels as it ended the day couple of points below its previous low. However, the Markets have attempted to take a support on the minor Double Bottom Formation. Today, we are likely to see a decently positive opening in the Markets and the Markets are expected to trade in positive at least in the initial trade. The Markets will also react to the Economic Survey coming out later today and the maintaining the possible positive opening would be important.

For today, the levels of 7034 and 7090 will act as immediate resistance levels for the Markets.  The supports come in at 6960 and 6870 levels.

The RSI—Relative Strength Index on the Daily Chart is 35.3237 and it does not show any failure swings. The NIFTY has made a fresh 14-day low but RSI has not yet and this is Bullish Divergence. The Daily MACD as reported a negative crossover and it now trades below its signal line.

On the derivative front, the March futures have begun with adding Open Interest of 44.91 lakh shares or 31.69%. The NIFTY PCR stands at 0.88.

Coming to pattern analysis, the Markets, as of yesterday have continued to remain in a broad trading range that it has formed between 6900 and 7240 levels. On the Closing charts, the Markets have attempted to take support on a minor double bottom formation and it is likely that it would validate that support. On the bar charts as well, though the intraday low remains lower, the Markets are within the overall broad range that is mentioned above. Having said this, today’s expected positive opening is likely to keep the Markets in that given broad range. It would be important to see that the Markets are able to maintain the expected positive gains. Any Close below the current close levels will increase the chances of the Markets testing its intraday 52-week lows.

Overall, the Markets continue to place themselves at a critical juncture wherein it is nearly mandatory to have a positive Close and keep itself in the broad trading range. Any loss at the Close levels will induce further temporary weakness in the Markets. With the current levels near its short term supports, we advise to refrain from creating any fresh shorts. Any longs, at the same time, should be protected 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 25, 2016

MARKET REPORT                                                                               February 25, 2016

Markets opened negative and ended yet another day with losses as caution weighed high ahead of Union Budget due to come up on Monday. The Markets witnessed a negative opening. It opened bit worse than expected but spent the morning trade moving in sideways trajectory with limited losses. Though it lost some more ground, the afternoon trade saw an attempt to recover as the Markets managed to recoup some of its losses. When at one point when the Markets traded with only marginal losses, the second half of the trade did most of the undoing for the Markets. The Markets started to lose ground on accelerated note and went on to form the day’s low of 7009.75. No recovery was seen and the Markets finally settled the day at 7018.70, posting a net loss of 90.85 points or 1.28% while forming a lower top and lower bottom on the Daily Bar Charts.

MARKET TREND FOR THURSDAY, FEBRUARY 25, 2016

Markets are likely to see a flat opening once again and look for directions. It poises itself at critical juncture as today remain a expiry day of current February series. At the same time, it faces three important events as well. Railway Budget comes up later in the day today, Economic Survey tomorrow and Union Budget on Monday. The technical structure shows throws mixed indications as though they wear a moderately bearish undertone, at the same time, they are unlikely to make fresh 52-week lows until there is some drastically wrong with Budget proposals.

For today, the levels of 7075 and 7120 are immediate resistance levels for the Markets. The supports come in at 6990 and 6930 levels.

The RSI—Relative Strength Index on the Daily Chart is 36.9588 and it remains neutral as it shows no bullish or bearish divergence or failure swings. The Daily MACD still remains bullish as it trades above its signal line.

On the derivative front, NIFTY has reported 55% rollovers so far. The February series shed over 29.80 lakh shares or 20.80% in Open Interest whereas the March series added over 39.56 lakh shares or 38.73% in Open Interest. The NIFTY PCR stands at 0.68 as against 0.75 yesterday.

Coming to pattern analysis, in lines with what we mentioned often in our previous editions, the Markets have reacted sharply from 7240 levels. These levels are now continuing to act as resistance as it was the support that the Markets breached on the downside. Having said this, the Markets are unlikely to breach the levels of 6869, the 52-week lows that it has formed couple of sessions back. The reasons are manifold. First, the volumes have declined; second, the PCR stands at one of the lowest levels in recent times indication of unwinding of decrease in overall Put positions. However, in event of three major events that the Markets face, the Markets are expected to hold 6869 levels as support on the downside unless something goes wrong drastically with the Union Budget proposals.

Overall, all is certainly not well with the Markets are the Markets have shown no signs of confirmation of any formation of the bottom so far. At the same time, a look solely at the technicals of the Markets suggests less possibilities of making fresh bottoms. However, at the same time good amount of volatility will remain ingrained in the Markets as the Markets will have a lot to reach to the events coming up in next three days. We continue to reiterate to refrain from any significant exposures and adopt highly 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