Daily Market Trend Guide -- Wednesday, October 07, 2015

MARKET REPORT                                                                             October 07, 2015

The Markets showed good amount of resilience yesterday after Monday’s gain as it ended the day with modest gains recovering from the day’s lows. The Markets saw little subdued opening and after opening in the positive note it drifted slowly in the first half of the session to trade flat. By afternoon trade the Markets gradually but slowly dipped into the negative. It got little weaker by afternoon as it formed the day’s low at 8096.50 but took support at its 50-DMA. The second half of the session saw some decent reversal coming in. The Markets reversed its trend and recovered its losses to trade flat. The late afternoon trade saw the Markets going further into positive territory.  It further went on to form the day’s high at 8180.95, recovering nearly 85-odd points from the low point of the day. Some gains were pared from these levels and the Markets finally settled the day at 8152.90, posting a modest gain of 33.60 points or 0.41% while continuing to form a higher top and higher bottom on the Daily Bar Charts.

MARKET TREND FOR WEDNESDAY, OCTOBER 07, 2015

Markets are likely to see some consolidation today. We are likely to see the Markets opening on a flat note and look for directions. It is important to note that the Markets have advanced over 490-odd points in last five sessions and therefore it cannot be ruled out that it might see itself consolidating at higher levels. It is also important to note that the Markets are approaching its another pattern resistance as well.

For today, the levels of 8180 and 8225 will act as immediate resistance levels for the Markets. The supports would come in at 8110 and 8060 levels.

The RSI—Relative Strength Index on the Daily Chart is 59.6723 and it has reached its highest value in last 14-days which is bullish. It does not show any bullish or bearish divergence on the Chart. The Daily MACD remains bullish as it trades above its signal line.

Coming to derivative front, the NIFTY October series have shed a 17,750 shares or nominal 0.09% in Open Interest. The OI, practically remains unchanged, and therefore we can safely assume continuation of bullish undertone in the Markets. The NIFTY PCR stands at 0.99 as against 0.97.

Coming to pattern analysis, the Markets have broken out of the broad trading range as mentioned often in our previous editions of Daily Market Trend Guide. While doing so, it has moved past its key resistance levels of 7960-8000 zone and also 8060 levels. It now trades above its 50-DMA and in event of any consolidation, it is likely to test supports of its 50-DMA levels. In event of some consolidation persisting, it is likely to test its supports of 8060 levels. This is because this is the level which was as resistance earlier and is now expected to act as support in event of any consolidation.

All and all, given the technical structure of the Markets and also given the fact that it is risen some 490-odd points in last five sessions, it is very much likely that it sees some selling pressure and minor profit taking at higher levels. Any up moves should be now utilized to protect existing profits. Dips should also be used to make modest purchases while remaining extremely selective. Cautious optimism is advised for 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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