MARKET REPORT January
22, 2016
Markets failed to capitalize on a buoyant
opening and lost ground during the day and ended yet another day with modest
losses. The Markets saw a positive opening and after opening on a positive not
strengthened further to form the day’s high of 7398.70. However, this remained
for a brief time and the markets soon transformed itself into falling
trajectory. It gradually kept losing ground and at one point in the afternoon
trade, it traded near its previous close after paring all of its opening gains.
It slipped further into the red and in the second half of the session formed
the day’s low at 7250, coming off nearly 150-odd points from the high point of
the day. It attempted recovery and at one point also recovered its losses to
trade briefly into the green. However, post some more slippage, it finally
settled the day at 7276.80, posting a net loss of 32.50 points or 0.44% while
forming a lower top but slightly higher bottom on the Daily Bar Charts.
MARKET TREND FOR FRIDAY, JANUARY 22,
2016
Today’s analysis continues to remain on
similar lines that of yesterday. We can expect a fairly positive start to the
Markets but just like yesterday, it would be critically important to see if the
Markets are able to capitalize on expected positive opening and build up
further gains on that. The lead indicators of the Markets are in “oversold”
territory and this likely to aid the Markets give a sustainable pullback.
For today, the levels of 7325 and 7390 are
likely to act as immediate resistance levels for the Markets. The supports
exist at 7250 and 7175 levels.
The RSI—Relative Strength Index on the Daily
Chart is 29.3675 and it trades in “oversold” territory. It does not show any
failure swing but the NIFTY has made a fresh 14-day low while the RSI has not
and this is Bullish Divergence. The Daily MACD is bearish as it continues to
trade below its signal line.
On the derivative front, the NIFTY January
futures have shed over 12.52 lakh shares or 6.02% in Open Interest. The NIFTY
PCR stands at 0.82 as against 0.83 levels.
While having a look at pattern analysis,
the Markets have got oversold after it lost ground once its breached its
critical pattern support of 7540. As mentioned often in our previous editions,
the Markets will face stiff resistance at 7540 levels as and when it pulls
back. Having said this, the Markets have been oscillating with a continuing
negative bias in 150-odd points range and currently stand oversold. There are
chances of a technical pullback today and the oversold nature of the Markets is
likely to aid the same. However, at the same time, it becomes important to note
that there is been no respite in massive put buying activity which throws
little negative light on the attempts of the Markets to find a bottom and if
not this, then it would certainly put a question mark on the sustainability of
any technical pullbacks.
Overall, it is evident that though the
Markets now currently stands “oversold”, they are not completely out of the
woods as yet. Though it has been vigorously trying to find a immediate short
term bottom, it has not done so as of now. In light of such technical condition
of the Markets, we continue to reiterate our stand of keeping the purchases to
restricted quantity and continue to protect profits at higher levels.
Milan
Vaishnav,
Consulting Technical Analyst
Af. Member: Market
Technicians Association, (MTA), USA
Af. Member: Association of Technical Market Analysts,
(ATMA), INDIA
+91-98250-16331
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