Daily Market Trend Guide -- Wednesday, October 14, 2015

MARKET REPORT                                                                                 October 14, 2015

Markets continued to correct yesterday as well and remained in downward trajectory throughout the day but finally ended the day with nominal loss after recovering in the last hour of the trade. The Markets saw a quiet opening on expected lines and formed its intraday high of 8150.25 in the early minutes of the trade while it traded positive for a very brief period. Soon after this, the Markets drifted into negative territory but did not see any major losses as it traded in a very narrow range of 22-odd points. It was the second half of the session once again that saw the Markets slide again. The Markets started to retrace once again and by late afternoon trade and went on to post the day’s low of 8088.60. It was once again the last hour of the trade that showed sharp recovery from lower levels. The Markets managed to recoup most of its losses and finally managed to settle the day at 8131.70, posting a nominal loss of 11.90 points or 0.15% while forming a lower top and lower bottom on the Daily Bar Charts.

MARKET TREND FOR WEDNESDAY, OCTOBER 14, 2015

Markets pose themselves at a critical juncture and they are slated once again to open on a modestly negative note. The Markets are likely to test its 50-DMA levels and it would be extremely important to see if they manage to trade above this. Any slippage below this will have the Markets testing yet another pattern support on the Daily Charts. The intraday trajectory that the Markets form will continue to play crucial role along with the volumes.

The levels of 8180 and 8230 will act as immediate resistance levels for today. The supports come in at 8085 and 8030 levels.

The RSI—Relative Strength Index on the Daily Chart is 56.6217 and it remains neutral as it shows no bullish or bearish divergence or failure swings. The Daily MACD remains bullish as it continues to trade above its signal line.

On the derivative front, the NIFTY October futures have shed over 7.58 lakh shares or 3.47% in Open Interest. This leaves little gap in interpretation as the Markets have seen most of the reduction in OI in the last minute of the spurt. This translates into sharp short covering from the lows of yesterday and on the same breadth, it leaves some gap for further unwinding as well. The NIFTY PCR stands at 1.01 today.

On the pattern analysis front, the Markets have resisted to its 100-DMA and the upper end of the “gap” that it created in the first week or September. On the downside, it has two pattern supports which are important to watch for. The first would be the zone of 50-DMA, i.e. 8085-8060 levels and if these are breached, the important pattern support that exist is 8000-levels. The volumes have been lower relatively and the Markets are likely to test is 50-DMA today if the weakness post opening persists for some more time. As mentioned earlier, it would be critically important for the Markets to find base early and resist any weakness from thereon.

Overall, the Markets are showing signs of some intermediate weakness and there are chances that we continue to see the Markets once again in consolidation phase. As mentioned in our previous edition, a sustainable up move shall occur only after the Markets moves past its 100-DMA and the pattern resistance thereafter. However, so long as it continues to trade above the mentioned pattern supports, any downsides should be continued to be utilized to make limited selective purchases. While there is no structural breach on the Charts, shorts should be strictly avoided while maintaining a cautious outlook on 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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