Daily Market Trend Guide -- Tuesday, October 27, 2015

MARKET REPORT                                                                             October 27, 2015

Markets spent a reluctant session as it chose to continue to consolidate and trade with minor losses once again. The Markets saw good positive opening but it never really managed to capitalize on it. The Markets opened positive, formed its intraday high of 8336.30 in the early minutes of the trade and then transformed itself into falling channel. It gradually pared its opening gains in the morning trade and traded flat. Markets gradually went on to dip into negative and spent the entire afternoon session and thereafter trading in negative trajectory. At one point of time the Markets managed to recover most of its losses but the last hour and half of trade once again saw the Markets paring that recovery. It went on to form the day’s low of 8252.05, while coming off nearly 70-odd points from the high point of the day. It finally settled the day at 8260.55 posting a modest loss of 34.90 points or 0.42% while forming a higher top but lower bottom on the Daily Bar Charts.

MARKET TREND FOR TUESDAY, OCTOBER 27, 2015

For the second day in a row, the Markets will continue to keep its analysis on similar lines. We will once gain see subdued opening and the Markets will continue to remain in consolidation with its important pattern levels continuing to act as supports. The Markets will have to maintain itself above these levels in order to avoid any further weakness. With the Markets set to open around these supports, the opening levels and the behaviour of the Markets post opening and its intraday trajectory that it forms would be important to watch out for.

For today, the levels of 8295 and 8340 will act as immediate resistance for the Markets. The supports come in at 8230 and 8200 levels.

The RSI—Relative Strength Index on the Daily Chart is 60.5664 and it remains neutral as it shows no bullish or bearish divergence or any failure swing. The Daily MACD remains bullish as it continues to trade above its signal line.

On the derivative front, the NIFTY October series have shed over 16.73 lakh shares or 8.87% in Open Interest whereas the November series added over 17.75 lakh shares or 29.87% in Open Interest. Net OI addition is seen at 1.45 lakh shares, indicating some minor opening of short positions.

While having a look at pattern analysis, the Markets have been consolidating between 100-DMA and its 200-DMA after having filled up the gap that it created in the first week of September. While doing so, it has moved past its two pattern resistance levels as well, the second on being the 8230-8240 level. Having said this, it would be important for the Markets to maintain itself above 8230-8200 levels as any breach below this will take itself once again in the broad trading range which can also cause it to consolidate for some more time. Because of this, with the Markets set to open around its immediate support levels, the intraday trajectory would be important to watch out for.

After a careful look at the technical charts, and the lead indicators, as of today it is clear that the Markets have not shown any signs of evident weakness. However, at the same time, it is very much likely that it consolidates for some more time to come. Given this scenario, we continue with our cautiously positive outlook on the Markets. While refraining completely from shorts, dips should be utilized to make moderate quality purchases.

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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