Daily Market Trend Guide -- Wednesday, January 20, 2016

MARKET REPORT                                                                                       January 20, 2016

The Markets finally saw a relief rally today as it opened on a positive note and strengthened during the day to end with gains. The Markets saw a modestly positive opening and after trading in capped gains in the early morning trade, the Markets transformed themselves into upward rising trajectory. The Markets spent most past of the session remaining in upward rising channel while gradually forming fresh intraday highs. It was in the second half that the Markets formed its day’s high of 7462.75. Thereafter, the Markets continued to trade sideways in the last hour and half. It did come off a bit from the high point of the day and finally settled the day at 7435.10, posting a net gain of 84.10 points or 1.14% while forming a slightly higher top and higher bottom on the Daily Bar Charts.

MARKET TREND FOR Wednesday, January 20, 2016

The Markets saw a much awaited technical pullback yesterday but it is important to observe that the rise that we saw yesterday was more on back of short covering than any fresh long positions as the Markets rose while shedding Open Interests across board. Today, we can once again expect a negative opening and it would be important to see if the Markets improve post opening. There are chances that Markets attempts to find base post modestly negative opening.

For today, the levels of 7475 and 7510 will act as immediate resistance levels for today. The supports come in at 7370 and 7320 levels.

The RSI—Relative Strength Index on the Daily Chart is 35.2631. It has just moved above from its “oversold” area which is bullish. It further remains neutral without showing any bullish or bearish divergence or any failure swings. The daily MACD remains bullish as it trades below its signal line.

On the derivative front, the  NIFTY January series have shed over 4.33 lakh shares or 2.04% in open interest. This clearly shows the rise that we got yesterday was more on back of short covering than any fresh buying.

Coming to pattern analysis, as mentioned often in our previous editions of Daily Market Trend Guide, the Markets have decisively breached its triple bottom support of 7540 levels during its downside in the previous sessions. It went on shed further over 200-odd points and while doing so it got oversold and yesterday, it showed technical pullback from the fresh 52-week lows. Having said this, it becomes important to mention again that the critical support levels of 7540 that the Markets breached on the downside will continue to pose major resistance to the Markets while it tries to find a bottom and reverse itself.

All and all, the Markets are attempting to find a base and after today’s expected lower opening, there are possibilities that the Markets shows some improvement as we go ahead in the lesion. Looking at the lead indicators, we advise to refrain from creating any short positions as the possibilities of short traps remain with every downtick. At the same time, it is also advised to continue to keep purchases and overall exposures at moderate levels while maintaining cautious optimism 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

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