Daily Market Trend Guide -- Tuesday, November 03, 2015

MARKET REPORT                                                                                     November 03, 2015

Markets ended with losses for the sixth day in a row but it ended yesterday after recovering significantly from its lows while attempting to form a base. The Markets saw a negative opening and the Markets opened below its critical levels of 8050. For the entire morning trade, the Markets struggled to move past this level. After initial range bound trade, the Markets started to lose ground gradually. It remained in downward trajectory and went on to form the day’s low of 7995.60 while testing its 50-DMA and its important pattern support levels as well. While this happened perfectly on expected lines, the final hour and half of the trade saw substantial recovery from the low point of the day. The Markets nearly recovered bulk of its losses and finally ended the day at 8050.80, posting a modest loss of 15 points or 0.19% while continuing to form a lower top and lower bottom on the Daily Bar Charts.

MARKET TREND FOR TUESDAY, NOVEMBER 03, 2015

Though the Markets have ended in the red for six consecutive days, it has attempted to form a base and find bottom yesterday as it took support near its patter support and its 50-DMA. Today, we can fairly expect a positive opening and see relief rally at least in the initial trade. So far, this will make the pattern support hold and the levels of 8050 and 8000 will return as all-important pattern supports in event of consolidation returning.

For today, the levels of 8080 and 8125 will act as immediate resistance. The supports will come in at 8005 and 7960.

The RSI—Relative Strength Index on the Daily Chart is 44.4878 and it has reached its lowest value in last 14-days which is bearish. However, it does not show any bullish or bearish divergence. The Daily MACD remains bearish as it trades below its signal line.  The Candles indicate potential short term bottom formation on the Daily Charts.

On the derivative front, the NIFTY November series have added over 1.81 lakh shares or 0.97% in Open Interest. This shows no major short covering took place from the bottom yesterday. Modest long positions are seen to have been built as well. The NIFTY PCR stands at 0.88 as against 0.85.

Coming to pattern analysis, today’s expected positive opening will take the Markets above the important levels of 8050. Once the Markets opens above this, this level of 8050 is expected to act as one of the important pattern support. It will also take the Markets back into the other consolidation/trading zone and the Markets are again expected to oscillate with minor positive bias. However, in the entire process, it would be important for it to maintain the support  zone of 8050-8000 levels to avoid any major short term weakness.

All and all, with the Markets expected to open above 8050 levels; it has more or less averted any major weakness in the immediate short term. It would be important to see that the Markets keep its head above this and the rallies are not sold into. It is advised to refrain from creating any major exposures and keep it limited and selective. Overall, a 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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