Daily Market Trend Guide -- Monday, November 23, 2015

MARKET REPORT                                                                      November 23, 2015

Markets continued to see some short covering from lower levels and also profit booking at higher levels as it ended the day with minor gains after coming off from the high point of the day. The Markets saw a lower opening and while trading in a very capped and narrow range; it formed its intraday low of 7817.80 in the morning trade. It was in the late morning trade, that the Markets saw a sharp rise. It witness a near parabolic up move that not only brought the Markets into the green but went on to form the day’s high of 7906.95. Markets perked up nearly 90-odd points from the low point. However, the Markets failed to sustain those levels. The second half of the session witnessed sideways movement but the Markets slid in the last hour of the trade. It pared nearly all of its gains and finally settled the day at 7856.55, posting a net gain of 13.80 points or 0.18% while forming a higher top and higher bottom on the Daily Bar Charts.

MARKET TREND FOR MONDAY, NOVEMBER 23, 2015

Today’s session remain important in a different way for the Markets. Today we enter into expiry week of the current derivative series and the Markets have been consolidating while consistently shedding Open Interest in the previous week. Today as well, we are likely to see modestly positive opening and key would be to see if the Markets are able to build up further on these opening gains. The unscheduled meeting of the Federal Reserve will have some effect on the sentiments of the Markets as well.

For today, the levels of 7900 and 7935 are immediate resistance for today. The supports come in at 7800 and 7740 levels.

The RSI—Relative Strength Index on the Daily Chart is 42.7954 and it remains neutral as it shows no bullish or bearish divergence. The Daily MACD remains bearish as it trades above its signal line. On the Weekly Charts, the RSI is 42.5226 and this too remains neutral as it does not show any bullish or bearish divergences.  The Weekly MACD too continues to remain bearish as it trades below its signal line.

On the derivative front, the NIFTY November futures continued to shed over 8.92 lakh shares or 5.35% in Open Interest. The NIFTY PCR stands at 0.78 as against 0.79 on Friday. The Markets have been witnessing a situation wherein it the shorts are grossly uncomfortable on the lower side but in the same breadth, all the up moves have been purely on account of short covering.

While having a look at pattern analysis, the Markets have consolidated all throughout the previous week. Though it has attempted to form a bottom, it has not done so far and is yet to confirm any bottom. For the Markets to confirm its bottom successfully, it will have to maintain supports around 7725 levels in event of any downsides. Any further weakness, if any, will have the Markets test its important pattern supports of 7680 levels. The outcome of the meeting of the Federal Reserve in December will have its sentimental effect on the Markets as well even if the rate hike of 25 bps stands more or less discounted.

Overall, the Markets are likely to continue to trade in a range and it would be important to see if the Markets sustain its likely opening gains and builds up on that. For the Markets to form a bottom successfully, it will require upsides with good participation and fresh longs rather than mere short coverings. Until this happen we will continue to see the Markets vulnerable to sell-offs as we have seen all through previous week. Cautious approach is continued to be advised on Markets today as well.

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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