MARKET TREND FOR TODAY

The correction in the Markets continued as it ended the day after coming off over 100-odd points from its intraday highs and ended the day at 6187.25, posting a net loss of 27.90 points or 0.45%.

Today, expect the Markets to open again on a modestly negative note and continue with its corrective activities. We had mentioned in our previous edition of the Daily Market Trend Guide that if the Markets breaches the levels of 6230, it might test its another support levels of 6140-6155 levels. Today's opening might cause the Markets to test these levels.

For today, the levels of 6230-6250 would continue to act as major resistance levels for the Markets. Support exists at 6155 and 6140 levels.

The RSI--Relative Strength Index on the Daily Chart is 56.1088 and it has reached its lowest value in last 14-days which is bearish. Also, RSI has set a new 14-day low while the NIFTY has not yet. This is bearish divergence. The Daily MACD remains bearish as it trades below its signal line.

On the derivative front, NIFTY November futures have yet another 7.49 lakh shares or 3.47% in open interest. This clearly shows that  unwinding and profit taking in the Markets have continued.

Going by the pattern analysis again, it is very clear that the breaching of the levels of 6230 has brought some more weakness in the Markets and there are chances that the Markets opens lower and takes support in the broad zone of 6140-6160 levels. Further to this, the lead indicators too show chances of continuing corrective activities in the Markets. The F&O data too show that long unwinding and profit taking has continued in the Markets.

Given this, it is also important to note that though the Markets are correcting, there is no structural breach on the Charts. So, shorts should be strictly avoided. Volatility shall remain and we can expect the Markets to take support anytime near the prescribed levels. Selective out performance of stocks would continue. It is advised to avoid shorts, take new positions extremely selectively and maintain liquidity to maintain current positions. Cautious outlook is advised for today.
 
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331