Daily Market Trend Guide -- Friday, January 09, 2015

MARKET REPORT                                                                                 January 09, 2015

Markets posed a smart pullback after two days of pathetic downsides as it ended the day with decent gains. With the global cues being favourable and the technical factors supportive, the Markets saw a gap up opening as it opened on a strong and decent note. These gains were maintained in the first half of the session s the Markets moved in 25-odd points range in sideways trajectory. The second half of the session saw further strength coming in as the Markets perked up further and went on to post the day’s high of 8243.50. These levels too were maintained and the Markets finally ended the day at 8264.60, posting a decent and strong gain of 132.50 points or 1.64% while forming a sharply higher top and higher bottom on the Daily Bar Charts.

MARKET TREND FOR FRIDAY, JANUARY 09, 2015

There are bright chances that the Markets would continue with the pullback. We can expect a positive opening tomorrow and the levels of 100-DMA would continue to remain important, but from a different perspective. It is expected to act as support in the immediate short term. The intraday trajectory and volumes too would remain important.

The levels of 8275 and 8330 would act as immediate resistance. The levels of 8140 would continue to act as immediate major support.

The RSI—Relative Strength Index on the Daily Chart is 48.1590 and it remains neutral as it shows no bullish or bearish divergence or failure swings. The Daily MACD is bearish trading below its signal line.

On the derivative front, the NIFTY January futures have shed 9.17 lakh shares or 4.90% in Open Interest. This means that this pullback has been aided by very sharp short covering at lower levels. It would be important that this replaced by fresh longs in the system.

Taking a cue from pattern analysis, the Markets have taken support at its 100-DMA twice in recent past and therefore this levels have held on as major support. Though the pullback that we have seen has been due to short covering, the pattern analysis shows that the Markets are likely to continue with is pullback and may advance to its further immediate resistance of 50-DMA, i.e. around 8330 levels.

Overall, the Markets are likely to continue with its pullback. However, it is important that apart from short covering which has aided the pullback, we also see fresh longs being taken. Purchases from lower levels can be made and selective stock picking would continue. While remaining vigilant at higher levels, the overall remains intact and therefore sectoral out performance would continue.

Milan Vaishnav,
Consulting Technical Analyst,
Af. Member: Market Technicians Association (MTA), USA
Af. Member: Association of Technical Market Analysts, INDIA

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