Tuesday, August 9, 2016

Daily Market Trend Guide -- Tuesday, August 09, 2016

MARKET TREND FOR TUESDAY, AUGUST 09, 2016
The Markets did not give a runaway rise yesterday as it consolidated at higher levels. Though it posted fresh 52-week high, the levels of 8710-8720 continued to remain sacrosanct as the Markets ended the day with modest gains. Today, we can expect a flat start to the Markets and the Markets may remain  range bound in the initial trade and the levels mentioned will continue to act as immediate resistance to the Markets. The RBI comes up with Credit Policy Review later in the morning and the Markets will react to that as well.

For today, the levels of 8710 and 8745 will act as immediate resistance levels for today. The supports come in at 8640 and 8605 levels.

The RSI—Relative Strength Index on the Daily Chart is 66.8049 and it does not show any failure swing. However, NIFTY has formed a fresh 14-day high but RSI has not and this forms a Bearish Divergence on the Daily Charts. The Daily MACD stays bearish as it continues to trade below its signal line. A Doji on the Candles implies a potential halt to the up move in the Markets. However, this needs confirmation.

On the derivatives front, the NIFTY August futures have added over 7.05 lakh shares or 2.95% in Open Interest. The NIFTY PCR stands at 1.0 as against 0.97 yesterday.

While having a look at pattern analysis, the Markets have not given a runaway rise and the levels of 8711 were not breached comprehensively yesterday. Though the Markets did form a fresh 52-week high but it ended the day coming off from its intraday high and this keeps the previous level intact as immediate resistance for the Markets. For any sustainable up move to occur, the Markets will have to move past 8711-8725 range comprehensively. Until this happens, the Markets will either continue to remain in the consolidation zone or will remain vulnerable to intermittent selloffs from higher levels.

Overall, the Markets may attempt a fresh up move but until the mentioned levels are breached comprehensively, the Markets may continue to consolidate and volatility will remain ingrained in it as well. The RBI’s Credit Policy review is likely to remain a non event as not rate cut is expected. We continue to reiterate to use all up moves more to protect profits while keeping fresh purchases highly selective and stock specific.

Milan Vaishnav, CMT
Technical Analyst

Member: Market Technicians Association, (MTA), USA
Member: Association of Technical Market Analysts, (ATMA), INDIA

+91-98250-16331



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