Daily Market Trend Guide -- Thursday, January 28, 2016

MARKET REPORT                                                                                      January 28, 2016

Markets traded grossly volatile yesterday and it ended almost flat with very negligible gains after oscillating back and forth within a limited range. The Markets saw a positive opening but it soon pared its opening gains in the early morning trade itself to trade flat. Thereafter, in the first half of the session, the Markets headed nowhere as it remained in sidewards trajectory in a much capped range. It saw a sharp spurt in the second half wherein it went on to form the day’s high at 7477.90. However, these gains were not sustained and the Markets pared all of its gains to dip into negative forming a day’s low of 7419.70. It came off nearly 50-odd points from the high point of the day. It continued to oscillate sideways and finally settled the day at 7437.75, posting a negligible gain of 1.60 points or 0.02% while forming almost a parallel bar on the Daily Bar Charts.

MARKET TREND FOR THURSDAY, JANUARY 28, 2016

Today’s analysis continues to remain similar on yesterday’s lines. The Markets are expected to open on a flat to mildly positive note and look for directions. Today is the expiry day of the current January derivative series and we will continue to see the trade remaining dominated with rollover centric activities. The Federal Reserve deciding to keep the key rates unchanged will help avoid the global volatility as it has kept off another rate hike in the near future.

For today, the levels of 7495 and 7540 will continue to act as immediate resistance levels for the Markets. The supports come in at 7420 and 7375 levels.

The RSI—Relative Strength Index on the Daily Chart is 40.9258 and it has reached its highest value in last 14-days which is bullish. Also, the RSI has set a fresh 14-period high whereas NIFTY has not yet and this is Bullish Divergence.  The Daily MACD still continues to remain bearish as it trades below its signal line but is moving towards reporting a positive crossover.

On the derivative front, NIFTY has witnessed nearly 54% rollovers as January series shed over 29.89 lakh shares or 19.66% in Open Interest. The February series added over 69 lakh shares in Open Interest. The NIFTY PCR stands unchanged at 0.83.

Coming once again to pattern analysis, the Markets have attempted to find a base at 7250-odd levels and have pulled back since then. The logical pullback targets for the Markets should be 7540 levels, the level which it broke on its way down. This level of 7540 is likely to act as resistance for the Markets on its way up. It should be noted that even if we test 7500-7540 levels again, it would be a pullback of over 250-300 odd points but it would not yet amount to any trend reversal and we would continue to remain in the immediate downtrend. In normal course, the Markets should go on an consolidate at higher levels and move up again forming a higher bottom from the recent lows.

All and all, there remains a lot to be done by the Markets to confirm a bottom. Even if it logically advances higher, it would be just continuing with its pullback. However, with the Fed voicing concerns over missing inflation targets, tinge of weakness persisting in the economy, etc., indicates that they would keep off with the rate hike in near future and this would certainly aid Emerging Markets in general and India in particular. We continue to reiterate our advice of refraining from short positions and making selective purchases while maintaining positively cautious outlook on the Markets.

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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