Daily Market Trend Guide -- Wednesday, February 17, 2016

MARKET REPORT                                                                                February 17, 2016

Quite on expected lines, the Markets displayed its vulnerability of being sold off  from anywhere above 7200 levels as it lost good amount of ground to end the day yet again with losses. The Markets opened on a modestly positive note and formed its intraday high of 7204.65 in the early morning trade. However, the Markets pared all of its opening gains in the first hour and half of trade and drifted in the negative. After trading with negative, but limited losses in the first half of the session, the Markets came under amplified pressure especially in the second half of the trade. It lost ground quite rapidly and went on to form the day’s low of 7037.70, paring nearly 170-odd points from the high point of the day. It finally ended the day at 7048.25, posting a net loss of 114.70 points or 1.60% while forming a slightly higher top but lower bottom on the Daily Bar Charts.

MARKET TREND FOR WEDNESDAY, FEBRUARY 17, 2016

The Markets have decoupled since yesterday with the Global Markets and have shown downsides despite global stability. However, today, we can once again expect a stable start to the Markets. The Markets are likely to see a modestly decent opening but the levels of 7240 are likely to continue to remain a immediate resistance for the Markets in the immediate short term. At the same time, the Markets are also less likely to retest or breach its low of 6869.

For today, the levels of 7085 and 7130 are likely to act as immediate resistance levels for the Markets. The supports come in at 7030 and 6965 levels.

The RSI—Relative Strength Index on the Daily Chart is 35.4977 and it remains neutral as it shows no bullish or bearish divergence or failure swings. The Daily MACD stays bearish as it trades below its signal line.

On the derivative front, the NIFTY February futures have once again added over 7.62 lakh shares or 3.73% in Open Interest. This shows addition of fresh shorts into the system. The NIFTY PCR stands at 0.78 as against 0.80.

While having a look at pattern analysis, the Markets resisted and declined from 7200-7240 range. These levels are likely to act as resistance as it was the last immediate support that it breached on the downside.  The Markets are expected to oscillate in a  broad range with the levels of 7200-7240 acting as immediate resistance. The lower range can be little broad as well with the levels of 6870. The previous low of the Markets are not likely to be breached. For the Markets to form and establish 6869-70 as immediate bottom, it will have to move past 7240 and trade above those levels. Until the Markets move past these levels, it will not be forming a confirmed bottom and would continue to remain vulnerable as ever to selloffs from higher levels.

All and all, though we can expect a modestly positive start to the Markets, it would be important to take note of the fact that the Markets are not yet out of the woods. It currently trades in what is known “trading range” with either no directional bias or with mildly bearish undertone. This structure of the Markets will remain until it moves past 7240. It is advised to continue to refrain from excessive position and adopt 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

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