Daily Market Trend Guide -- Friday, January 29, 2016

MARKET REPORT                                                                                        January 29, 2016

Though the Markets traded in a capped range, the session remained quite volatile as the Markets ended the series on a volatile note while posting nominal losses. The Markets saw a modestly negative opening but soon crawled into the positive territory in the early morning trade. However, the Markets made no definite headway and continued to trade sideways in a very narrow range. While it headed nowhere in the first half, the second half saw strength coming in as the Markets went on to post its day’s high of 7468.85. However, this did not sustain as the Markets saw near vertical paring of gains in the final hour of the trade mostly dominated with rollovers. It dipped into negative while posting day’s low of 7409.60. It finally settled the day at 7424.65, posting a nominal loss of 13.10 points or 0.18% while forming a parallel bar on the Daily Bar Charts.

MARKET TREND FOR FRIDAY, JANUARY 29, 2016

The Markets have ended the series with a net loss of over 6.6% this month and has been the worst month in recent past. Today, we once again continue to keep the analysis on similar lines. The Markets are expected to open on a flat note and look for directions. The Markets have been trading in a capped range and has been consolidating post a pullback from recent lows. It is important that the Markets now built up on this consolidation and continue with its pullback in order to avoid any immediate weakness.

For today, the levels of 7480 and 7540 continue to remain as immediate resistance levels for the Markets. The supports come in at 7400 and 7365 levels.

The RSI—Relative Strength Index on the Daily Chart is 40.2615 and it remains neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD still continues to remain bearish as it trades below its signal line.

On the derivative front, the NIFTY saw rollovers of 70.80% as against its 3-month average of 68.2%. The January futures have added over 39.29 lakh shares or 26.38% in Open Interest. There has been net addition in OI indication further addition of shorts in the Markets.

The Markets have been forming almost parallel bar on the Daily Chart and therefore the reading for short term pattern analysis remains on similar lines. After pulling back from 7250-odd levels, the Markets are now consolidating and if it continues to pullback, the next levels that it is expected to test are 7540. However, this being the major support that the Markets broke on the downside is expected to pose major resistance while on its way up. Overall, the Markets are pulling back after the breach of 7540 levels and so far shown no signs of a reversal. Though it has certainly attempted to find a bottom, reversal still needs to be confirmed.

Overall, the Markets continue to remain in a tentative state. The upcoming earnings continue to cause some sentimental damage to the Markets. The overall technical structure of the Markets continue to remain in immediate downtrend but since it has attempted to form a bottom and has been consolidating while adding good amount of shorts across the boards, shorting should be avoided in the immediate short term. We repeat and continue with our view of making very selective purchases and protecting the profits with every pullback that is seen.

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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