Daily Market Trend Guide -- Friday, November 06, 2015

MARKET REPORT                                                                                 November 06, 2015

Markets had a thoroughly disappointing session once again as it breached its important pattern support as it ended the day with losses. The Markets saw a flat opening on expected lines and as it has been doing since last couple of sessions, formed its intraday high of 8031.20 in the early minutes of the trade. After trading with capped losses in the morning, it slipped a bit only to recover again by early afternoon trade. It was the second half of the session that did most of the undoing. The Markets saw sudden and persistent weakness creeping in as it started gradually losing ground. It saw sustained weakness, more so in the last hour of the trade as it went on to breach the 8000-mark and formed its intraday low of 7944.10. No major recovery was seen and the Markets finally settled the day at 7955.45, posting a net loss of 84.75 points or 1.05% while forming a sharply lower top and lower bottom on the Daily Bar Charts.

MARKET TREND FOR FRIDAY, NOVEMBER 06, 2015

Markets may open today on a flat to mildly positive note while keeping a heavily cautious eye on the Bihar polls result as the overall structure continue to remain little subdued and cautious. The Markets might see opening around its rising trend line support and it would be once again critical to see if this trend line holds as support. If not, then some more weakness cannot be ruled out. However, there are some chances of some consolidation or a mild relief rally, but cautious would continue to weigh very heavy on the Markets.

For today, the levels of 7985 and 8040 will act as immediate resistance for the Markets. Supports come in at 7940 and 7880 levels.

The RSI—Relative Strength Index on the Daily Chart is 38.1314 and it has reached its lowest value in last 14-days which is bearish. It does not show any bullish or bearish divergence. The Daily MACD remains bearish as it continues to trade below its signal line.

On the derivative front, the NIFTY November series have added over 3.56 lakh shares or 1.91% in Open Interest.  This indicates initiation of net short positions in the Markets. The NIFTY PCR stands at 0.86 as against 0.90.

While having a look at pattern analysis, the Markets have breached its other patter support of 8000 level and has also closed a notch down below its 50-DMA which stands at 7985 today. Going up, these levels are once again likely to pose resistance to the Markets. However, as of now, the Markets now rests at a short term rising trend line support and it would be important to see once again if the Markets manages to find some base or attempts to take support here. Any further breach will induce some more immediate short term weakness in the Markets. However, there are chances that the Markets might see a relief rally but the sentiment will face resistance from the heavily cautious outlook that the Markets are wearing.

All and all, the Markets are currently at a very critical juncture wherein it has multiple pattern resistances going upwards. On the other hand, it rests at a short term support of a rising trend line and it would be interesting to see if the Markets hold to that support. External factors like Bihar poll outcome will induce some volatile oscillations in the Markets. It is advised to refrain from creating any significant exposure in the Markets and maintain enough liquidity to absorb volatile movements. Continuation of cautious outlook 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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