MARKET TREND FOR WEDNESDAY, JANUARY 25, 2017
The Indian Equities continued to display strength perfectly
on the analyzed lines as the benchmark NIFTY50 resisted to 100-DMA zone in the
first half of the session and then broke out on the upside while ending the day
with decent gains of 84.30 points or 1%. We expect the up move to continue and
expect the Markets to test the 8530-8550 zones wherein it can meet another
major pattern resistance as indicated in the Chart. Today, we enter the expiry
of the current derivative series and we expect some amount of volatility to
remain as well. The session will remain dominated with rollover centric
activity and some intermittent bouts from higher levels cannot be ruled out
given the indications thrown by the lead indicators.
For today, the levels of 8510 and 8535 will remain
resistance levels for the Markets. The supports will come in at 8430 and 8390
levels.
The Relative Strength Index – RSI on the Daily Chart is
65.8237 and it does not show any failure swings. However, the NIFTY has set a
fresh 14-period high while the RSI has not and this has resulted into Bearish
Divergence on this lead indicator. The Daily MACD remains bullish while
continuing to trade above its signal line. On Candles, a strong white candle
that has occurred signals potential continuation of up move.
On the derivative front, heavy rollovers continued as the
NIFTY January series shed over 46.98 lakh shares or 30.35% in Open Interest
while February series added over 59.73 lakh shares or 89.20% in Open Interest.
The up move has come with an increase in Open Interest which is a positive
sign.
While having a look at pattern analysis, it becomes clear
that the NIFTY has attempted to move out of the broad trading range that it had
formed. This trading range had resistance levels of 8430-8460 zones which also
consist the 100-DMA of the NIFTY. The NIFTY deliberated in the previous session
around 100-DMA and then it moved up further. We can expect the up move to
continue and there are chances that the NIFTY tests 8530-8550 levels in short
term.
Having said this, the lead indicators show some weariness in
the immediate short term. Given the Bearish divergence on the lead indicators,
there are high chances that we see NIFTY encountering some profit taking at
higher levels. Given the overall structure of the Charts read along with the
lead indicators, we now advice to emphasize more on profit booking at higher
levels. All up moves from now on should be utilized more to protect profits at
higher levels.
Milan Vaishnav, CMT
Technical Analyst
(Research Analyst, SEBI Reg. No. INH000003341)
Member:
Market Technicians Association, (MTA), USA
Canadian Society of Technical Analysts, (CSTA), CANADA
+91-98250-16331
