Daily Market Trend Guide -- Monday, December 07, 2015

MARKET REPORT                                                                                 December 07, 2015

Markets have posed themselves at a critical juncture as downside continued on Friday as well as the Markets opened lower and ended further weak with losses. The Markets saw a negative opening on expected lines and traded with capped losses in the first half. After moving in sideways trajectory in the first half of the session, the Markets attempted a mild pullback wherein it managed to form its intraday high of 7821.40. However, it still continued to trade in the negative territory. Once again, in the last hour and half of the trade, the Markets grew weaker once again and traded once again near its opening levels. It further pared its gains and formed its intraday low of 7775.70. No major recovery was seen and the Markets finally settled the day at 7781.90, posting a net loss of 82.25 points or 1.05% while forming a sharply lower top and lower volumes on the Daily Bar Charts.

MARKET TREND FOR MONDAY, DECEMBER 07, 2015

The Markets poses itself very precariously at the current levels after Friday’s Close. The Markets have ended their day at a important pattern support. Today, it is likely to see a significantly decent opening but it would be very crucial and important to see if it is able to sustain its opening gains and manages to capitalize on its initial gains. This would be extremely important for the Markets in order to avoid any weakness from creeping in more in immediate short term.

For today, the levels of 7820 and 7875 will act as immediate resistance for the Markets. The supports come in at 7750 and then much lower at 7680 levels.

The RSI—Relative Strength Index on the Daily Chart is 38.5753 and it remains neutral as it shows no bullish or bearish divergence or any failure swing. The Daily MACD continues to remain bullish as it still trades above its signal line. On the Weekly Charts, the Weekly RSI is 41.4043 and is neutral without showing any bullish or bearish divergence or failure swing. The Weekly MACD remains bearish as it trades below its signal line.

On the derivative front, the NIFTY December futures have added over 1.82 lakh shares or 0.94% in Open Interest. This very clearly signifies that there has been creation of net shorts in the Friday’s session. Though this figure may not be significant, it is important enough to indicate that there has been no offloading of long positions. The NIFTY PCR stands unchanged at 0.79.

Coming to pattern analysis, the Markets have proved the levels of 8000 once again as its one of the major pattern resistance as it retraced over 200-odd points after resisting there. As of Friday, it closes at one of its important pattern support once again. Though a positive opening is all likely to day, as mentioned earlier, it would be of paramount importance for the Markets to sustain that positive opening and build up on that later. Until this happens, the Markets remain vulnerable to breach this pattern support as well which may then take the Markets to another important support levels of 7680. However, it is unlikely in the immediate short term if the Markets manages to hang on to its current support.

All and all, the Markets are set to see a positive opening but are just not completely out of the woods. As mentioned earlier, sustaining a possible positive opening would be of paramount importance for the Markets to avoid testing it’s another pattern support. Though the bias certainly remains a bit positive, it is advised to keep the approach heavily selective and stock specific as sector specific out performance will continue. 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

+91-98250-16331
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