Daily Market Trend Guide -- Tuesday, February 02, 2016

MARKET REPORT                                                                                   February 2, 2016

Markets traded yesterday on analysed lines as it consolidated after Friday’s gain in a narrow range and ended the day flat with minor losses. The Markets saw a flat opening and after trading in a capped range in the initial trade, inched up further to form the day’s high of 7600.45 in the morning trade. However, the upside remained capped as the Markets started to gradually pare its gains. The Markets, very slowly, but gradually pared its gains as it remained in falling trajectory and by afternoon trade, it traded flat. In the second half of the session, it dipped slightly more into negative while forming the day’s low of 7541.25 and finally settled the day at 7555.95, posting a minor loss of 7.60 points or 0.10% while forming a higher top and higher bottom on the Daily Bar Charts.

MARKET TREND FOR TUESDAY, February 2, 2016

The Markets have traded yesterday on analysed lines as it consolidated while the levels of 7540 act as support. Today, we can expect a flat to mildly positive start to the Markets. The analysis continues to remain on similar lines as the Markets are expected to consolidate with upward bias and the levels of 7540 will continue to act as support and it would be the important levels to watch out for. Today, RBI is coming up with Credit Policy later in the day and the Markets would also react to that.

For today, the levels of 7600 and 7645 will act as likely resistance and the supports come in at 7540 and 7460 levels.

The RSI—Relative Strength Index on the Daily Chart is 49.1501 and it remains neutral as it shows no bullish or bearish divergence or any failure swings. Daily MACD remains bullish as it trades above its signal line.

On the derivative front, the NIFTY February futures have added over 6.90 lakh shares or 3.56% in Open Interest. This is good indication that the Markets are trying to build some base for continuation of a pullback.

While having a look at pattern analysis, the Markets have managed to move above the critical levels of 7540 and have managed to stay above that. If it is to consolidate at these levels, it will have to keep its head above 7540 levels to avoid any short term weakness again. However, in event of the Markets significantly slipping below the levels of 7540 again, it may lead to weakness persisting for some more time. Therefore, the levels of 7540 continue to remain important levels to watch out for and in ideal condition, the Markets should consolidate keeping that level as bottom support and move on from there.

Overall, so far as RBI Credit Policy is concerned, the RBI is expected to keep the key rates unchanged and this remains discounted by the Markets. The Markets are likely to remain capped and trade in a range in the initial trade and later react to the RBI news flow, however, any hike, will remain a positive surprise for the Markets. Keeping in line with recent analysis, we continue to reiterate to continue to keep making selective purchases while guarding profits at higher 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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