Daily Market Trend Guide -- Wednesday, September 02, 2015

MARKET REPORT                                                                                   September 02, 2015

Markets wore a terribly bearish undertone today as it opened lower following weaker technicals and ended with deep losses further fuelled by global negativity. The Markets saw lower opening on expected lines and continued to trade with modest losses in the afternoon trade. It was the afternoon trade and thereafter that the Markets saw somewhat total rout as it got weaker and witnessed heavy bouts of selling pressure. It got weaker in the second half of the session and went on to form lower lows gradually and steadily. In late afternoon trade, the Markets went on to form the day’s low of 7746.50. No major recovery was seen from the low point of the day. However, the Markets finally settled the day at 7785.85, posting a net loss of 185.45 points or 2.33% while forming a sharply lower top and lower bottom on the Daily Bar Charts.

MARKET TREND FOR WEDNESDAY, SEPTEMBER 02, 2015

The Markets are expected to open on a quiet note today and look for directions. After having failed to fill the gaps created on 21^st and 24^th of August and remaining above 8000-mark, the Markets have continue to remain in the intermediary bear trend. Today as well, even if we see some modestly positive opening and some attempts by the Markets to find base, some amount of volatility and selling pressure from higher levels cannot be ruled out.

For today, the levels of 7850 and 7910 will act as immediate resistance for the Markets. The supports come in at 7750 and 7670 levels.

The RSI—Relative Strength Index on the Daily Chart is 32.0275 and it does not show any failure swing. However, the NIFTY has formed a fresh 14-day low while RSI has not and this is Bullish Divergence. The Daily MACD continues to remain bearish as it trades below its signal line.

On the derivative front, the NIFTY September futures have added 10,700 shares or 0.05% in Open Interest. This figure remains almost negligible and makes us difficult to reach any conclusion. At least no major short covering has been reported. The shorts created in couple of sessions back continues to exists and may get some covering later today.

Coming to pattern analysis, the Markets have failed to clear its important pattern resistance zone of 7960-8000 levels. Having said this, even if the Markets attempts to move past these levels in near future, it will have to “fill” the gaps that it created on 21^st and 24^th August of gap downs. Having said this, until this pattern is completed any time in future during a pullback, the Markets will continue to see ranged volatility. The band that the Markets have created in bit large of 200-odd points and it will continue to oscillate in this band with some good amount of volatility ingrained in it with somewhat negative bias. Further, the depth of the Markets also remains a problem as each technical pullback has come with lower volumes.

All and all, the shorts that were seen created in last couple of session continue to exist in the futures segment. Given this thing, the Markets may see a positive opening and some technical pullback but it will continue to remain vulnerable to selling pressure a higher levels. It is advised to continue to refrain from creating any major exposures. The Markets are all set to continue to oscillate in a broad trading range until the major pattern resistance of 7960-8000 levels is cleared. Until this happens, very cautious outlook with extremely stock specific approach is advised.

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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