Daily Market Trend Guide -- Wednesday, October 21, 2015

MARKET REPORT                                                                                  October 21, 2015

Very much on expected line, the Markets continued to remain in consolidation phase as it traded in a narrow range and ended the day with minor losses. The Markets saw a relatively quiet opening and spent the morning session in a quite ranged movement. At one point, the Markets saw some nominal strength coming in as it formed its intraday high of 8294.05. However, the Markets reverted back to its opening levels soon. Thereafter, for the most part of the session, the Markets were seen oscillating in a very narrow range but the second half of the session saw some rapid paring of gains. The Markets slipped and went on to form the day’s low of 8229.20. Once again, some last hour of the trade saw some recovery coming in as the Markets were seen off its lows. It finally settled the day at 8261.65, posting a minor loss of 13.40 points or 0.16% while forming a slightly higher top but lower bottom on the Daily Bar Charts.

MARKET TREND FOR WEDNESDAY, OCTOBER 21, 2015

The analysis remains more or less on similar lines once again as the Markets continues to remain in consolidation mode. With us having truncated week, (tomorrow being a trading holiday), it is likely that we will continue to see somewhat lack of volumes and participation in the Markets. The pattern resistance that the Markets were able to move past will continue to act as support and any breach of that level will take the Markets back into the big broad consolidation zone once again.

For today, the levels of 8290 and 8340 will act as immediate resistance for the Markets. The supports will come in at 8230 and 8170 levels.

The RSI—Relative Strength Index on the Daily Chart is 62.1962 and it remains neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD remains bullish as it trades above its signal line. On the Candles, a Engulfing Bearish Pattern has occurred. This since formation has occurred after a significant up move / pullback; it is likely to keep the Markets in congestion zone for some more time. However, this needs confirmation.

On the derivative front, the NIFTY October futures have shed over 3.44 lakh shares or 1.73% in Open Interest. This figure is little discouraging is it shows some offloading of positions having taken place.

Having a look at pattern analysis, the Markets have managed to keep is head above important resistance levels of 8320-40.  These are the levels that the Markets managed to move past in previous sessions and having done this, these levels are expected to act as support in event of any further congestion / consolidation. It would be important to see that the Markets remain above these levels. Any breach in these levels on the downside will take the Markets back in to the broad consolidation zone and will diminish the chances of any significant and sustainable up move.

Overall, the Markets will see a subdued and quiet opening and will require good amount of involvement / participation for a proper up move. Until this happens it will continue to oscillate in the congestion zone. It would be also important for the Markets to maintain levels above of 8340 to avoid any further weakness. With the Markets not taking any proper convincing directional call, we continue to reiterate our advice of refraining from creating shorts and making selective but limited purchases with any available dip. Overall, cautious outlook is advised for the day.

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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