Daily Market Trend Guide -- Wednesday, August 05, 2015

MARKET REPORT                                                                            August 05, 2015

The Markets remained extremely volatile and moved in nearly 100-odd points range in total and finally ended the day with modest losses. The Markets saw better than expected positive opening but immediately slipped into the red in the initial seconds of the trade. After trading with limited and capped losses in the morning trade, the Markets managed to trade in positive territory for a very brief period while forming its intraday high of 8565.15. While reacting to the RBI Credit Policy review where the RBI kept the rates unchanged, the Markets saw a very volatile bout of profit taking in the afternoon trade. It went on to form the day’s low of 8448.25 half way through the session. However, the second half of the trade saw the Markets recovering bulk of its losses. The Markets finally ended the day at 8516.90, posting a modest loss of 26.15 points or 0.31% while forming a similar top but lower bottom on the Daily Bar Charts.

MARKET TREND FOR WEDNESDAY, AUGUST 05, 2015

Markets are again set to open on a mildly positive to quiet note and look for cues. However, given the overall technical structure of the Charts as well as F&O data, it is likely that the Markets continue to remain in consolidation mode for some more time to come. It is likely that is oscillates in a wide range of 8650-8400 range while also remaining above all of its DMAs at the same time. The intraday trajectory that the Markets form post opening would be critical to dictate the trend for the day.

For today, the levels of 8560 and 8625 will act as immediate resistance levels. The supports come in at 8450 and 8410 levels.

The RSI—Relative Strength Index on the Daily Chart is 54.4982 and it is neutral as it shows no failure swings or any bullish or bearish divergences. The Daily MACD continues to remain bearish as it trades below its signal line.

On the derivative front, NIFTY August futures have shed over 7.96 lakh shares or 4.73% in Open Interest. This can be interpreted in two ways. On one hand, at Close levels, we see clear shedding of Open Interest with the decline in NIFTY. Also, we can observe that the Markets lost OI while it saw a sharp pullback from lower levels yesterday. Overall, this means that there is no comfort levels on either side in the Markets.

Coming to pattern analysis, the Markets are continuing to witness to the rising trend line support which it broke couple of days back. This rising trend line, which was a support earlier is likely to continue to act as its resistance on the upside for couple of days more to come. This would keep the Markets in a consolidation zone while it trades in a bit wide range with some amount of volatility ingrained in it.

Overall, we continue to reiterate cautious stand on the Markets. There has been sharp sectoral out performance and divergence in gains observed. However, the Markets shall also witness sharp bouts on either side leaving it vulnerable to some volatility. It is continued to be advised to keep fresh exposure limited to very select stocks and maintain adequate liquidity and cautious optimism in 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

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