Daily Market Trend Guide -- Thursday, November 05, 2015

MARKET REPORT                                                                                 November 05, 2015

Markets thoroughly disappointed yesterday as it ended the day with modest losses and failed to capitalize on the positive opening once again. The Markets saw little less strong opening than what was expected and formed its intraday high of 8116.20 in the very early minutes of the trade. We had mentioned expected opening around its resistance levels of 8120 and the Markets resisted precisely there. Thereafter, it remained in downward falling trajectory throughout the session and pared all of its opening gains by afternoon trade. In the late afternoon trade, the Markets dipped further in the negative as it formed its intraday low of 8027.30 while coming off nearly 90-odd points from the high of the day. It finally settled the day at 8040.20, posting a net loss of 20.50 points or 0.25% while forming a slightly higher top and lower bottom on the Daily Bar Charts.

MARKET TREND FOR THURSDAY, NOVEMBER 05, 2015

Markets are expected to open on a flat note and shall struggle to make it above 8050 levels. It would be important for the Markets to move past 8050 levels so as to continue to remain in consolidation state. However, with the modestly lower to flat opening expected, the possibility of the Markets testing its important pattern support zone of 7995-8010 cannot be ruled out which also coincides with its 50-DMA. Therefore, this again keeps the overall analysis on similar lines and the intraday trajectory would be important to watch out for.

For today, the levels of 8055 and 8110 shall act as immediate resistance levels for the Markets. Supports exist at 7995 and 7960 levels.

The RSI—Relative Strength Index on the Daily Chart is 43.8301 and it has reached its highest value in last 14-days which is bearish. It does not show any bullish or bearish divergence. The Daily MACD remains bearish as it trades below its signal line.

On the derivative front, the NIFTY November futures have shed over 3.03 lakh shares or 1.60% in Open Interest. There has been clear unwinding of positions seen from higher levels given the reduction of Open Interest. The NIFTY PCR stands at 0.89 as against 0.90 levels.

Coming to pattern analysis, the Markets have attempted to take support once again near 8050 levels though it has closed a notch below that. It would be, therefore, important for the Markets to move past 8050 levels to continue to remain in a broad range bound consolidation. However, in event of some more weakness persisting, the markets have possibilities to test the levels of 7995-8010 support zones. These remain one of the important supports for the Markets as any breach will induce weakness for the immediate short term.

Given the overall analysis, it is imperative for the Markets to maintain levels above 7995-8010 levels in order to avoid further weakness from creeping in. Given the expected flat opening, the Markets are likely to continue to trade in a range. Since the Markets have not made any significant breach on the Daily Chart, it is advised to refrain from creating any shorts in the Markets. It is advised to continue to use dips for making modest and selective purchases while maintaining a positive caution 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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