Daily Market Trend Guide -- Monday, January 04, 2016

MARKET REPORT                                                                                           January 04, 2016

The Markets saw a session of modest gains as it ended the day on a positive note in the range bound session. The Markets saw a quiet and flat opening but it soon drifted into the negative in the morning session while it formed its intraday low of 7909.80. Though the Markets continued to trade in negative territory in the morning trade, it gradually recovered all of its morning losses to trade flat and briefly in the positive. However, the afternoon trade once again saw the Markets drifting as it traded in the negative territory. The Markets overall remained quite directionless and in a much capped range. It was the late afternoon trade which saw the Markets giving a sharp spurt. The Markets traded in the positive once again and even went on to form the day’s high of 7972.55. After hovering once again in a capped range, the Markets finally settled the day at 7963.20, posting a net gain of 16.85 points or 0.21% while forming a higher top and higher bottom on the Daily Bar Charts.

MARKET TREND FOR MONDAY, JANUARY 04, 2016

The Markets are expected to open on a modestly lower note following reaction of the Asian Markets to the weak Chinese PMI Data. However, it is important to note that though we may see lower opening, the Indian Markets are expected to show relative resilience and the levels of 50-DMA are expected to lend a good and important support to the Markets. There are fair chances that post negative opening; we see a ranged movement and improvement later as we go ahead in the session.  The levels of 50-DMA will be important to watch out for.

For today, the levels of 7981 and 8000 will act as important support levels for the Markets. The Support come in at 7905 and 7870 levels.

The RSI—Relative Strength Index on the Daily Chart is 58.6777 and it has reached its highest value in last 14-days which is bullish. It does not show any bullish or bearish divergence. The Daily MACD stays bullish as it trades above its signal line. On the Weekly Charts, the Weekly RSI is 48.2460 and it remains neutral as it shows no bullish or bearish divergence or any failure swings. The Weekly MACD is bearish as it trades below its signal line.

On the derivative front, the NIFTY January series have added over 4.60 lakh shares or 2.43% in Open Interest. The NIFTY PCR stands at 0.76 as against 0.77 on Friday.

Coming to pattern analysis, it is very much evident that though the Markets have managed to keep its head above 50-DMA post minor consolidation after the pullback, the levels of 100-DMA and the all important pattern resistance of 8000 have remain sacrosanct. The Markets have continued to show retracement at least twice it reached near it. The 100-DMA is falling and today it stands at 7981.Therefore, 7981 and 8000 will continue to act as major resistance for the Markets. No fresh strong up move shall occur until the Markets moves past these levels. Until it moves past these levels, the Markets will continue to witness selling pressure from near these levels. Also, while breaching these levels on the upside, it will have to do so with good volumes and participation.

Overall, until the levels of 7980 and 8000 are breached, the Markets are once again expected to see consolidation near these levels. This is likely to lead to intermittent selling pressures from higher levels and some amount of volatility is likely to remain ingrained in the Markets. It is advised to vigilantly protect profits, if any, at these levels and continue to keep purchases moderate until we see fresh upward breakout from the significantly important resistance levels.

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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