MARKET TREND FOR WEDNESDAY, OCTOBER 05, 2016
After a lackluster first half and a volatile second half,
the domestic equity markets ended with modest gains yesterday. Today, we can
expect a quiet start to the Markets and our analysis remain on similar lines
that of yesterday. RBI cut its key rate – Repo Rate – by 25 basis points to
6.25% and this should have positive effect, though temporary on the Markets.
The 6 member MPC unanimously voted for a rate decrease as they found inflation
well within the tolerance levels. However, speaking on technical terms, the
Markets are still not out of the woods and the levels of 8800-8850 will remain
extremely critical levels to watch out for.
For today, the NIFTY is likely to face resistance at 8785
and 8820 levels. The supports will come in at 8730 and 8690 levels.
The RSI—Relative
Strength Index on the Daily Chart is 52.8526 and it remains neutral as it shows
no bullish or bearish divergence or any failure swings. The Daily MACD is
bearish as it trades below its signal line. However, in coming days, if no
major downsides are seen, we may see a likely positive crossover on the Daily
Charts. On the Candles, a Doji occurred. A long lower shadow is
also seen and looking at the place of occurrence, it can potentially halt the
current pullback.
Careful study of the pattern analysis makes it quite evident
that after a strong downward breach from the Descending Triangle formation; the
Markets have pullback entire of its losses and have moved inside the triangle
formation once again. In given case, the level of 8690 will be critical support
level to watch out for. In event of any corrective movement, any breach below
8690 will induce fresh amount of weakness in the Markets. On the upper side,
the zones of 8800-8850 will pose stiff resistance.
Overall, choppiness and volatility are likely to remain
ingrained and we will see some capped movements in the session. The Markets
have a inherent weak technical bias for the immediate short term until it is
trading below 8800-8850 levels. To be out of the current pattern and ready itself
for a fresh up move, the NIFTY needs to move past these levels. Until then,
while making stock specific purchases, all up moves should be used to
vigilantly protect profits at higher levels.
Milan Vaishnav, CMT
Technical Analyst
(Research Analyst, SEBI Reg.
No. INH000003341)
Member:
Market Technicians Association, (MTA), USA
Canadian Society of Technical Analysts, (CSTA), CANADA
Association of Technical Market Analysts, (ATMA), INDIA
http://milan-vaishnav.blogspot.com
+91-98250-16331
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