Daily Market Trend Guide -- Monday, February 08, 2016

MARKET REPORT                                                                               February 06, 2016

Markets witnessed a short covering led rally as it opened higher and ended the day with modest gains. The Markets saw a mildly positive opening and strengthened further in the morning session and traded with modest gains. Thereafter the Markets saw itself trading in sideways trajectory in the first half of the session as it headed nowhere and continued to trade with modest gains. In the second half, the Markets saw some more strength coming in and went on to form the day’s high of 7503.15. These gains were maintained and the Markets finally ended the day at 7489.10, posting a decent gain of 85.10 points or 1.15% while forming a higher top and higher bottom on the Daily Bar Charts.

MARKET TREND FOR MONDAY, February 8, 2016

Markets have ended near the high point of the day on Friday and speaking purely on technical grounds, it is likely to open bit higher and continue with its up move. Major Asian Markets such as China, Hong Kong, Singapore and Taiwan are shut today. Today, we can expect our Markets to open on a quiet note and look for directions. It has attempted to find base once again and expected have not made any fresh lows. Again while pulling back, the logical target and resistance levels both should be 7540 and it should be the important levels to watch out for.

For today, the levels of 7540 and 7575 will act as important resistance levels for today. The supports come in lower at 7405 and 7380 levels.

The RSI—Relative Strength Index on the Daily Chart is 47.3764 and it remains neutral as it shows no bullish or bearish divergence or any failure swings.  The Daily MACD stays bullish as it trades above its signal line. On the Weekly Charts, the Weekly RSI is 39.7262 and this also is neutral as it does not show any bullish or bearish divergence or any failure swings. The Weekly MACD is bearish as trades below its signal line.

On the derivative front, the NIFTY February futures have shed over 4.20 lakh shsares or 2.22% in Open Interest. This makes further evident the fact that the rally that we saw on Friday remained largely on back of short covering.

Coming to pattern analysis, the Markets as done often in our previous editions, we need to point out few things. W e had pointed out that the Markets are not likely to make fresh low even if it resisted to 7540 levels. The Markets have held out this reading so far and have make a higher bottom 7350 as indicated with a small rising trend line and have attempted to move back towards 7540. However, at the same time, it becomes important to note that by doing this, the Markets have just, for once more time, have attempted to form a bottom but it is yet to give any definite confirmation for the same. So, once again, the levels of 7540 remains critical levels to watch out for and the Markets will have to move past this level and sustain above this to confirm a bottom for the immediate short term.

All and all, with the Markets yet to confirm its bottom, it continues to remain vulnerable to resistance at 7540-7600 range and also remain vulnerable to sell-offs from higher levels. Given this fact, while once should continue to make quality stock specific purchases; it is also advised that short term profits need to be vigilantly protected at higher levels. While adopting stock specific approach, cautious optimism is advised for today.

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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