Daily Market Trend Guide -- Monday, August 24, 2015

MARKET REPORT                                                                                         August 24, 2015

Following global weakness, the Indian Markets as well responded to it as it opened with a gap down and ended the day with losses though it did see some recovery in the final hours of the trade. The Markets saw itself finally breaching the neckline of the Head and Shoulders formation that we have been mentioning often in our previous editions of the Daily Market Trend Guide. The Markets saw a gap down opening amid global mess and opened nearly 1.50% gap down. It made its intraday low of 8225.05 in the early minutes of the trade and thereafter and saw itself trading in a very narrow and capped range. The Markets traded in some 25-odd points range while it also saw each of its minor recovery being sold into. However, the second half of the session; especially the last hour and half of the trade saw the Markets attempting a recovery. It recover somewhat 50-odd significant points and finally ended the day at 8299.95, posting a net loss of 72.80 points or 0.87% forming a sharply lower top and lower bottom on the Daily Bar Charts.

MARKET TREND FOR MONDAY, AUGUST 24, 2015

In our previous editions of Daily Market Trend Guide, we have been mentioning of a bearish formation – Head and Shoulders – on the Daily Charts. The Markets gave a downward breach on Friday from its neckline. Unfortunately, today as well, we are set to see yet another gap down opening in the Markets. The Markets are likely to open on a significantly lower note. However, on the same lines, it should be note that India shall see a relative outperformance even in the weaker times and it is likely that the Markets tries to find its bottom after such significantly negative opening.

For today, the levels of 8205 and 8140 are likely to act as immediate supports for the Markets on Daily Charts.

The RSI—Relative Strength Index on the Daily Chart is 40.2168 and it has reached its lowest value in last 14-days which is bearish. It does not show any bullish or bearish divergence. The Daily MACD too remains bearish as it trades below its signal line. On the Weekly Charts, the Weekly RSI is 46.9134 and it is neutral as it shows no bullish or bearish divergence. Weekly MACD still remain bullish as it trades above its signal line.

On the derivative front, NIFTY August futures have added 79,550 shares or 0.54% in Open Interest. This figure is insignificant to reach any conclusion however; bulk of it came down in the last hours of the trade on Friday.

Coming to pattern analysis, the Markets have broken down from the neckline of the Head and Shoulder Formation and today as well, with the gap down opening expected, it is likely to continue with its downsides. However, if we apply the measuring implication of this formation, today’s opening is likely to coincide with it supports. Given this fact, we may see the Markets continuing to trade with opening losses in the first half of the  session but may see some resilience in the second half.

Overall, the Markets are set to see a negative gap down opening but are also likely to open at its expected supports. We can see some outperformance coming into the Markets later in the day and we might see the Markets NOT going beyond its opening losses. We will see some buying coming in at lower levels as we saw on Friday as well. However, given the uncertain current global Markets, it is advised to refrain from taking any major call 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

Consultant to:
www.MyMoneyPlant.co.in
+91-98250-16331
milan.vaishnav@equityresearch.asia
milanvaishnav@yahoo.com