Daily Market Trend Guide -- Wednesday, February 10, 2016

MARKET REPORT                                                                               February 10, 2016

The Markets remained thoroughly bearish as it opened lower and it also ended the day with losses after spending the day in a very narrow range. The Markets saw lower opening following weak global markets and opened with a gap down. After opening with a gap down, the Markets saw itself trading in sideways trajectory. At no point in the first half of the trade did the Markets make any attempt to recover while it formed its intraday low of 7275.15 remaining only a small distance from its 50-week low.  In the second half, the Markets did see mild recovery wherein it attempted to recoup some part of its morning losses. However, no major recovery was seen and the Markets finally ended the day at 7298.20, posting a net loss of 89.05 points or 1.21% while forming a sharply lower top and lower bottom on the Daily Bar Charts.

MARKET TREND FOR WEDNESDAY, FEBRUARY 10, 2016

The Markets faces a very critical session today. It is likely to open on a gap down note once again. Today’s likely negative opening will see the Markets testing its 52-week lows of 7241 and it would be very critical to see the behavior of the Markets vis-à-vis this level. It would be very important for the Markets to attempt to find support around this level and any significant breach will induce more weakness into the Markets. The intraday trajectory, therefore, shall be very important to watch out for today.

For today, the levels of 7325 and 7360 will act as immediate resistance levels for the Markets. The supports come in at 7240 and 7175 levels.

The RSI—Relative Strength Index on the Daily Chart is 38.3466 and it remains neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD still continues to trade bullish as it trades above its signal line.

On the derivative front, the NIFTY February futures have 7.41 lakh shares or 3.84% in Open Positions. This continues to indicate unwinding / reduction of positions from higher levels. Also, the NIFTY PCR stands at 0.82 as against 0.79.

Coming to pattern analysis, the Markets have become significantly bearish after it first breached its triple bottom support of 7540 from a descending triangle formation. Since then, the levels of 7540 have been acting as a significant resistance for the Markets in its every attempt to pullback. The Markets have retraced over 200-points twice after attempting to move past that level again in recent past. Having said this, the Markets are likely to test its 52-week low  of 7241 and it would be critically important to see if the Markets are able to keep its head above that. As mentioned earlier, any significant breach below 7241 will see the Markets heading lower.

Overall, it becomes important for the Markets to try and improve as we go ahead in the session given the expected gap down opening. It will have to keep itself above 7240 levels in order to avoid any more weakness from creeping in. It is advised to refrain from taking any significant exposure on either side and adopt heavy caution in the Markets while maintaining adequate amount of liquidity in the Markets to guard positions. Major exposures on either side should be avoided.

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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