Daily Market Trend Guide -- Thursday, September 03, 2015

MARKET REPORT                                                                              September 03, 2015

The Markets continued to languish as it failed once again to capitalize on much better than expected opening as it ended the day with modest losses. The Markets saw strong and positive and while trading with gains in the morning trade, it formed its intraday high of 7862.55. However, the Markets slowly pared all of its morning gains and traded flat. It continued to trade flat in the afternoon session and remained more or less in sideways trajectory. It was in the second half of the trade that the Markets weakened further. It continued slide and went on to form the day’s low of 7699.25. It pared some 160-odd points from the high point of the day. Though some minor recovery was seen, it finally ended the day at 7717.00, posting a net loss of 68.85 points or 0.88% while continuing to form lower top and lower bottom on the Daily Bar Charts.

MARKET TREND FOR THURSDAY, SEPTEMBER 03, 2015

We can expect the Markets to open on a relative quiet and calm mode. We might see some modest opening but at the same time, we continue to remain vulnerable to sell offs from higher levels as significant selling in the cash segment continues to be reported by the FIIs. Speaking purely on technical terms, minor technical pullback is likely but at the same time, vulnerability of selling pressure at higher levels remain present.

For today, the levels of 7780 and 7820 levels are set to act as immediate resistance for the Markets. The supports exist at 7660 and 7610 levels.

The RSI—Relative Strength Index on the Daily Chart is 30.3085 and this stands nearly oversold. The RSI does not show any failure swings but shows Bullish Divergence as the NIFTY has set a fresh 14-day low but RSI has not. The Daily MACD remains bearish as it continues to trade below its signal line.

On the derivative front, NIFTY September futures have added over 6.58 lakh shares or 2.98% in Open Interest. This clearly signifies addition of fresh shorts in NIFTY Futures. The PCR stands at 0.99 as against 1.02. However, though short covering can be expected, it can get delayed if the selling in the cash segment continues.

Coming to pattern analysis, if the Markets continue to show weakness, it is likely to test the lows of 7667 levels. However, given the lead indicators, some technical pullback from these levels cannot be ruled out. The level of 7667 is too near to be called a double bottom, but it certainly remains a moderately important pattern support. Having said this, given the overall technical structure of the Markets, even if the pullback occurs, we would continue to remain vulnerable to selling at higher levels.

All and all, the Markets are set to open modestly positive and stable. The Markets are all likely to attempt to create a base at these levels but as mentioned earlier, they remain vulnerable to selling pressure from higher levels. In any case, if the Markets weaken, they are likely to test its previous lows. However, given the shorts in the system, some short covering today at lower levels cannot be ruled out. In event of a pullback, it would be important to see that the Markets pulls back with volumes which would be critically important for forming a bottom for 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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