Daily Market Trend Guide -- Wednesday, February 24, 2016

MARKET REPORT                                                                                    February 24, 2016

The Markets had a thoroughly disappointing session as the levels of 7240 remained stiff resistance for the Markets as it corrected and ended the day with losses. The Markets saw a modestly negative opening. It opened below the critical levels of 7240 and it recorded its intraday high of 7241.70 in the early minutes of the trade. After remaining very briefly into positive, the Markets slipped in the negative territory. It remained in downward falling trajectory for rest of the session and kept making gradual lows. It weakened a bit more in the final hour of the trade forming the day’s low of 7090.70, slipping over 150-odd points from the high point of the day. It finally settled the day at 7109.55, posting a net loss of 125 points or 1.73% while forming a similar top but sharply lower bottom on the Daily Bar Charts.

MARKET TREND FOR WEDNESDAY, FEBRUARY 24, 2016

The Markets are likely to open on a flat note and look for directions. There are chances that we see stability returning to the Markets and the Markets may limit its downside, at least in the initial trade. We enter the penultimate day of the expiry of the current derivative series and for today and tomorrow, we will see the Markets remain dominated with rollover centric activities. Also, we will see the Markets remain heavily cautious ahead of Union Budget on Monday.

The levels of 7145 and 7190 will act as immediate resistance levels for the Markets. The supports come in at 7065 and 7020 levels.

The RSI—Relative Strength Index on the Daily Chart is 40.22442 and it remains neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD is bullish as it trades above its signal line.

On the derivative front, the NIFTY February series have shed over 42.78 lakh shares or 22.99% in Open Interest. The March series added over 39.44 lakh shares or 62.90% in Open Interest. The NIFTY PCR stands at 0.73 as against 0.78.

As mentioned in our previous editions of the Daily Market Trend Guide, the Markets have been resisting multiple times to the levels of 7240. The primary reason being that this level is the support that the Markets breached while it formed its low of 6869. So, this level – 7240—will act as resistance while the Markets give a technical pullback. The pattern analysis very clearly suggests that though the bottom has been formed at 6869, as of now, this remains a near term bottom. However, in any case, the Markets have not confirmed any kind of reversal from these levels. In absence of any reversals and its confirmation, the Markets will continue to oscillate in a broad range as it has been doing in couple of previous sessions.

Overall, the Markets are also likely to remain ingrained with some amount of volatility as well. The expiry week as well as caution and adjustments before the Union Budget will add to the volatility that the Markets will witness. Also, with no bottom being formed, the oscillation in a broad range is also likely to remain somewhat volatile as well. Overall, we continue to reiterate to keep purchases limited and maintain adequate liquidity in the Markets while continuing with cautious outlook for the day.

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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