Daily Market Trend Guide -- Friday, September 04, 2015

MARKET REPORT                                                                                 September 04, 2015

The Markets saw a technical pullback on expected lines as it opened higher, strengthened further and ended the day with gains, though on lower volumes. The Markets saw a decently positive opening it remained in sideways trajectory in the first half of the session, though it successfully continued to maintain its opening gains. At one point in the afternoon, the Markets did lose some of its gains but the second half saw the Markets strengthening again. It moved upwards further and went on to form the day’s high of 7845.60. Markets slightly came off from these levels but maintained bulk of its gains. It finally settled the day at 7823.00, posting a decent gain of 106 points or 1.37% while forming a lower top but higher bottom on the Daily Bar Charts.

MARKET TREND FOR FRIDAY, SEPTEMBER 04, 2015

Expect the Markets today to open on a modestly negative note and look for directions. The Markets have vigorously attempted to form a base yesterday but it is not completely out of woods as bulk of yesterday’s rise has come on short covering and on lower participation and volumes. For the Markets to form a base at current levels successfully, it will have to see some fresh longs with good amount of participation to help it sustain it.

For today, the levels of 7850 and 7925 will act as immediate resistance levels for the Markets. The supports come in at 7750 and 7670 levels.

The RSI—Relative Strength Index on Daily Charts is 36.0036 and it remains neutral as it shows no bullish or bearish divergence or any failures wings. The Daily MACD still remains bearish as it trades below its signal line.

On the derivative front, the NIFTY September futures have shed 92,400 shares or 0.41% in Open Interest. This indicates net short covering in the Markets. Fresh longs have been seen at lower levels but they have been lesser in amount as compared to short covering.

Coming to pattern analysis, the Markets have attempted to form a base near its pattern support levels of 7667 levels. The up move that we saw yesterday have been purely technical in nature as the Markets were trading nearly “oversold” yesterday as per lead indicators. The pullback that we saw yesterday was imminent but it would be more important to see if the Markets successfully forms a  base around these levels. For it to form a base, any more up moves need to be accompanied with fresh longs and not just short covering and also with good participation.

All and all, we have not moved past all global events and the Markets are once again slated to open modestly negative today. Given this fact, the Markets are likely to continue to remain subdued and will see itself trading in a given range with some amount of volatility. Fresh purchases at any lower levels can be made but in modest quantities as the Markets have just attempted a reversal and has not confirmed it. While remaining modestly positive, caution should be exercised at with any up move.

 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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