Daily Market Trend Guide -- Tuesday, April 05, 2016

MARKET REPORT                                                                                  April 05, 2016

Though the Markets ended the day notch above the 7550 level, these levels of 7540-7560 acted as a resistance as the Markets resisted nearly for the entire session. The Markets saw a better and positive opening as expected and traded with capped gains in the morning trade. The morning session remained nearly range bound but after that the Markets slowly pared nearly all of its gains. Until late afternoon trade, the Markets remained in downward sloping channel and continued to pare its opening gains gradually. At one point of time, it dipped into negative for a brief period while it formed its intraday low of 7704.60. It was the second half of the session that saw the Markets recovering again. It recouped all of its gains and formed its intraday high of 7764.45. It finally settled the day at 7758.80, posting a net gain of 45.75 points or 0.59% while forming a higher top and higher bottom on the Daily Bar Charts.

MARKET TREND FOR TUESDAY, APRIL 05, 2016

Today, we are once again likely to see a lower opening in the Markets. With the Markets set to open on a lower note following weakness in the Asian Markets, the levels of 7740-7760 will continue to act as important pattern resistance for the Markets. The RBI too is coming up with its Credit Policy Review later in the morning today and the Markets would react to that as well. A rate cut of 25 bps stands discounted by the Markets.

For today, the levels of 7760 and 7795 will act as resistance levels for the Markets. The supports come in at 7690 and 7650 levels.

The RSI—Relative Strength Index on the Daily Chart is 64.5947 and it does not show any failure swing. However, the NIFTY has set a fresh 14-period high whereas RSI has not and this is Bearish Divergence. The Daily MACE stays bullish as it trades above its signal line but the histogram slop is falling indicating MACD moving towards negative crossover in absence of any rise in the Markets.

On the derivative front, the NIFTY April futures have added over 2.59 lakh shares or 1.40% in Open Interest.

Coming to pattern analysis, the Markets have been resisting to the levels of 7740-7760 which have been acting as a pattern resistance over couple of times in previous sessions. Having said this, it becomes important to note that this is the pattern resistance drawn in form of a falling trend line drawn from 8600 levels. However, with the Markets moving sideways in last couple of sessions and with this line falling, the resistance levels too have come down to 7720-7730 levels. There are chances that even with lower openings, the Markets maintain levels above this and resist any downsides. However, if the Markets fall below 7720 levels or open below this, then temporary weakness cannot be ruled out.

Overall, some amount of volatility cannot be ruled out as the Markets will trade range bound in the morning session and then react to RBI Credit Policy Review later in the morning. The entire zone of 7720-7760 will be important to watch out for and this zone practically remains a no-trade zone. Until the Markets move past these levels, all up moves should be utilized to protect profits on existing positions while keeping fresh purchases very limited. Overall, continuance of cautious outlook is advised for today.

Milan Vaishnav,
Consulting Technical Analyst

Member: Market Technicians Association, (MTA), USA
Member: Association of Technical Market Analysts, (ATMA), INDIA
www.EquityResearch.asia
http://milan-vaishnav.blogspot.com

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