Daily Market Trend Guide -- Monday, September 07, 2015

MARKET REPORT                                                                             September  07, 2015

The Markets continued to wear a bearish undertone once again on Friday following weak technicals as it opened lower and weakened further to end the day with losses. Markets opened lower on expected lines following global weakness and spent the morning session trading in sideways trajectory while continuing to trade with losses. The Markets remained more or less in sideways trajectory in a very narrow range making no attempts to recover in the first half of the session. The second half saw some more weakness creeping in as the Markets slipped further to testing its previous lows and forming the low point of the day at 7626.85. No major recover was seen and the Markets finally settled the day at 7655.05, posting a net loss of 167.95 points or 2.15% while forming lower top and lower bottom on the Daily Bar Charts.

MARKET TREND FOR MONDAY, SEPTEMBER 07, 2015

Expect the Markets to open on a modestly negative note and look for directions. The Markets currently have a bearish technical structure but there are two things that can cause a temporary technical pullback. First, it trades near important short term support zone and second; the Markets are currently nearly oversold. However, the overall build up of the Markets on technical charts show strong possibilities of any technical pullback getting sold into.

For today, the levels of 7710 and 7740 will act as immediate resistance levels for the Markets. The supports come in at 7620 and 7550 levels.

The RSI—Relative Strength Index on the Daily Chart is 31.5977 and trades very near to oversold territory. It does not show any failure swing but the NIFTY has formed as fresh 14-day low but RSI has not and this is bullish divergence. The Daily MACD continues to remain bearish as it trades below its signal line. On the Weekly Charts, the Weekly RSI is 33.7965 and it has reached its lowest value in last 14-days which is bearish. It does not show any bullish or bearish divergence. The Weekly MACD  is bearish as it trades below its signal line.

On the derivative front, the NIFTY September futures have added over 5.06 lakh shares or 2.23% in Open Interest. This point towards addition of shorts in the derivative segment. The NIFTY PCR stands at 0.96 as against 0.99 on previous day.

Coming to pattern analysis, the Markets are struggling to find base near current support levels. After forming lows of 7667 on 25^th August, the Markets did pulled back. However, it retraced again after it failed to fill up the gap it created on 21^st August. The gap still persists and the zone above 7960-8000 will continue to pose considerable resistance to the Markets in days to come. Currently the Markets may attempt a pullback given its nearly oversold condition. Another reason that can cause a pullback is that the Markets are attempting to take support on 100-DMA on the Weekly Charts as well. However, given the lead indicators and the F&O data, we still have the possibility of any good technical pullback being sold into.

All and all, the Markets currently trade at very good and important short term support levels. There are chances that post modestly negative opening, we may see some improvement in the Markets as we go ahead in the session. If the Markets continue to retrace, it would get oversold temporarily and therefore some technical pullback cannot be ruled out. It is advised to continue to stay away from taking any major exposures as the bottoms have not been found even on temporary basis. Heavy caution is advised in the Markets today even if it attempts to pullback.

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

+91-98250-16331
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