Daily Market Trend Guide -- Monday, November 02, 2015

MARKET REPORT                                                                                    November 02, 2015

Markets saw correction continuing as it traded very much on dotted lines and ended yet another day with losses while testing its important pattern supports. The Markets opened on a flat note and trade sideways in the morning trade while briefly dipping into negative for a very brief period. It saw some strength coming in the first half of the session as it perked up a bit and formed its day’s high of 8146.10. The Markets maintained these gains for a very short time as in the afternoon, slowly pared its gains to trade flat. It dipped into negative and in the second half of the session slipped further and went on to form the day’s low of 8044.40. The Markets came off nearly 100-odd points from its intraday high tested its important pattern support. It did make a very feeble attempt to recover but finally settled the day at 8065.80, posting a net loss of 45.95 points or 0.57% while forming a lower top and lower bottom on the Daily Bar Charts.

MARKET TREND FOR MONDAY, NOVEMBER 02, 2015

In Friday’s edition, we had expressed possibilities of the Markets testing the pattern supports of 8050 levels. Today as well, it keeps the analysis more or less on similar lines. Today expected subdued opening will again cause the Markets to open near its pattern supports. It would be critically important for the Markets to keep its head above this level. Any breach will cause the Markets to test its other pattern support which coincides with its 50-DMA as well.

For today, the levels of 8100 and 8125 will act as immediate resistance levels. The supports come in at 8050 and 8010 levels.

The RSI—Relative Strength Index on the Daily Chart is 45.5006 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 on the Daily Chart is bearish as it trades below its signal line. On the Weekly Charts, the Weekly RSI is 46.2555 and it remains neutral as it shows no bullish or bearish divergence or any failure swing. The Weekly MACD is bullish as it trades above it signal line.

On the derivative front, the NIFTY November futures have added over 9.49 lakh shares or 5.32% in Open Interest. This is clear indication of shorts being created afresh. The NIFTY PCR stands at 0.84 as against 0.86.

Coming to pattern analysis,  as mentioned in the opening paragraph, it would be important for the Markets to keep its head above the levels of 8050. Any downward breach will see the Markets testing another pattern support which also coincides with its 50-DMA. However, if we read the technicals on both Daily and Weekly Chart, it is very much likely that the Markets out performs its Asian peers and we see very limited downsides as such. Even if the Markets consolidate for a day here or there, the overall weekly charts indicate some amount of resilience at lower levels.

Keeping the overall reading of Daily and Weekly Charts as well, we expect the Markets to resist to relative downsides and remain resilient at lower levels. It is advised to refrain from shorts and continue to utilize the downsides to make selective quality purchases. However, with the Markets continuing to remain in corrective mode, such purchases should be kept limited. Overall, 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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