Daily Market Trend Guide -- Thursday, October 29, 2015

MARKET REPORT                                                                                October 29, 2015

The Markets had a terribly volatile session as it struggled throughout the 100-DMA after opening lower and ended the day with modest losses after coming off from the lows of the day. The Markets saw a negative opening and opened below its important support levels of 100-DMA. The Markets struggled throughout morning session with these levels as it traded below this in a sideways trajectory in the entire first half of the session. The Markets got weaker in the second half as it slipped further to form the day’s low of 8131.80 in the late afternoon trade. However, the last forty five minutes of the trade saw some recovery coming in at lower levels as the Markets recovered some 50-odd points from its low point. It finally settled the day at 8171.20, posting a modest loss of 61.70 points or 0.75% while forming a lower top and lower bottom on the Daily Bar Charts.

MARKET TREND FOR THURSDAY, OCTOBER 29, 2015

Markets are poised at a critical juncture as it slipped below its 100-DMA levels and has entered again in the broad consolidation zone that it had been trading in for the most part of the October month. Also, we can expect a modestly negative opening once again and the Markets are set to remain heavily dominated with rollover centric activities like yesterday as today is the expiry of the current series.

The levels of 8205 and 8240 will act as immediate resistance for the Markets. The supports will now come in a 8131 and 8080 levels.

The RSI—Relative Strength Index on the Daily Chart is 56.0661 and it has reached its lowest value in last 14-days which is bearish. Also, a Bearish Divergence is spotted as the RSI has formed a fresh 14-period low whereas NIFTY has not yet.  The Daily MACD continues to trade bullish as it trades above its signal line. However, it is likely that it reports a negative crossover if the Markets continues to remain in corrective mode.

On the derivative front, the NIFTY October futures shed over 44.35 lakh shares or 29.31% in Open Interest. The November series added over 32.66 lakh shares or over 31.53% in Open Interest. The NIFTY PCR stands at 1.06 as against 1.10 yesterday.

Coming to pattern analysis, the Markets had been in congestion zone between 8205 and 8280 levels in the previous week. This was after it cleared the broad rectangle formation wherein in consolidated in the broad range. The Markets had moved past its upper band of 8205-8230 range and it was expected to continue to move ahead. However, after the brief congestion, the Markets have slipped below the important pattern support of 8205, which also happens to be the 100-DMA of the Markets. Not only have the Markets slipped back into the broad consolidation zone, but the levels of 100-DMA will now pose resistance once again on it sway up.

Given this reading, and also given the fact that that today is the expiry day of the current series, some good amount of volatility cannot be ruled out today. There are fair chances that the Markets improve as we go ahead in the session post opening but at the same time, volatile oscillation like yesterday cannot just be ruled out. Keeping this in view, while continuing to refrain from shorts, purchases should be kept very limited and cautious outlook is advised for the Markets today.

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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