Daily Market Trend Guide -- Friday, October 07, 2016

MARKET TREND FOR FRIDAY, OCTOBER 07, 2016

In our yesterday’s edition, we had mentioned about the domestic equity markets remaining vulnerable to a profit taking bout from higher levels. While trading precisely on the analyzed lines, the NIFTY came off from its intraday highs by nearly 97-odd points to finally end the day with modest losses. Today, we expect a stable opening but also expect that the choppiness and volatility would continue to persist. The NIFTY continues to trade inside the Descending Triangle formation but the neckline support levels of 8690 also coincides with 50-DMA which is 8704. These two levels will continue to act as a major support for the Markets.

For today, the levels of 8745 and 8800 will act as immediate resistance levels whereas the supports will come in at 8690 and 8620 levels.

The RSI—Relative Strength Index on the Daily Chart is 48.6811 and it remains neutral showing no failure swings or any bullish or bearish divergence. The Daily MACD continues to remain bearish while trading below its signal line.

On the derivative front, the NIFTY October futures have shed over 2.07 lakh shares or 0.93% in Open Interest.

While having a look at pattern analysis, though it remains very much evident that the Markets continue to remain trapped in a small Descending Triangle formation, it hangs precariously in a manner that will cause the NIFTY to take a sharp directional bias in coming days. The neckline levels of this formation is 8690. If the NIFTY breaches this level, we will see some more weakness coming in. On the other hand, this neckline level, as mentioned above, also coincides with the 50-DMA levels which stands at 8704. This is expected to act as important support for the Markets at Close levels.

All and all, today the session is likely to remain volatile and on the upper side, the levels of 8800 will continue to pose stiff resistance. In the same breadth, the level of 8690 will be the critical level to watch out for NIFTY will have to trade above this to avoid any weakness. Stock specific purchases may be down but all up moves should be utilized to protect profits as intermittent selling bouts still cannot be ruled out 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

www.EquityResearch.asia

http://milan-vaishnav.blogspot.com

+91-98250-16331 

milan.vaishnav@equityresearch.asia

milanvaishnav@yahoo.com

Daily Market Trend Guide -- Thursday, October 06, 2016

MARKET TREND FOR THURSDAY, OCTOBER 06, 2016

Choppiness prevailed in the domestic equity markets as it remained volatile in a given range. As mentioned in our yesterday’s edition, the zones of 8800-8850 posed resistance as the Markets all of its opening gains once it resisted at 8806 levels. We keep our analysis more or less on similar lines again as the NIFTY remains trapped in Descending Triangle formation and therefore today, and for coming sessions, the zone of 8800-8850 will continue to pose critically stiff resistance.

For today, the level of 8775 and 8810 will act as immediate resistance while supports will come in at 8690 and 8665 levels.

The RSI—Relative Strength Index on the Daily Chart is 51.0806 and it remains neutral as it shows no bullish or bearish divergence or any failure swings.  The Daily MACD  stays bearish while trading below its signal line. On the Candles, and engulfing black candle has occurred following a doji / long lower shadow. This has a potential to bring in short term weakness. However, this needs a confirmation on the following day.

On the derivative front, the NIFTY October futures have added just over 1 lakh shares in Open Interest. There is no significant unwinding of positions that was seen in the Markets.

While having a look at pattern analysis, it is very much evident that the NIFTY continues to remain trapped in a Descending Triangle formation. This formation has been characterized with falling tops and the bottoms remaining at 8690. In the given context, the level of 8690, which is the neckline, remains very critical support for the Markets. On the other hand, given the falling nature of the tops, in coming days 8800-8850 zones will pose very stiff resistance. It is further evident that in case the NIFTY breaches 8690 on the downside, we will see some more weakness creeping in. For the Descending Triangle to fail, it would be necessary that the NIFTY moves past 8850 levels. Until this happens, it will remain vulnerable to selling pressure from higher levels.

Overall, just like yesterday, today as well we keep our reading and conclusion on similar lines. NIFTY remains in the present potentially bearish formation of a descending triangle. Therefore, though we will continue to see stock specific purchases, it is advised that more cash levels should be maintained and all up moves should be continued to be used to protect profits at higher levels as intermittent bouts of profit taking at higher levels cannot be ruled out.

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

www.EquityResearch.asia

http://milan-vaishnav.blogspot.com

+91-98250-16331 

milan.vaishnav@equityresearch.asia

milanvaishnav@yahoo.com

Daily Market Trend Guide -- Wednesday, October 05, 2016

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

www.EquityResearch.asia

http://milan-vaishnav.blogspot.com

+91-98250-16331 

milan.vaishnav@equityresearch.asia

milanvaishnav@yahoo.com

Daily Market Trend Guide -- Tuesday, October 04, 2016

MARKET TREND FOR TUESDAY, OCTOBER 04, 2016

The domestic Equity Markets rebounded on a strong footing after fizzling out of the tension at borders, the Markets saw a sharp up move. Today, though we may expect the Markets to continue with its up move, we do reiterate a word of caution. It is important to note that though the levels of 8690 have been moved past, the Markets have not completely neutralized the Descending Triangle formation and therefore caution is definitely likely to weigh on the Markets at higher levels. Secondly, the RBI comes up with Credit Policy tomorrow. For the first time, it will be a change wherein the RBI Governor would not be the sole deciding authority and MPC (Monetary Planning Committee) will cast its vote on the rate changes. Also, it would come out at 2.45 PM and not at its usual time of 11 AM and this is certainly to cause volatility in the second half of the session.

For today, the levels of 8765 and 8800 will act as immediate resistance levels whereas the supports will come in at 8690 and 8650 levels.

The RSI—Relative Strength Index on the Daily Chart is 50.9039 and it remains neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD continues to remain bearish while trading below its signal line.

On the derivative front, the NIFTY October futures have shed over 8.38 lakh shares or 3.67% in Open Interest. This makes it very much evident that there has been large scale short covering from the lower levels.

Pattern analysis on the Daily Charts makes it evident that the Markets have defied the Descending Triangle pattern as yet. Even though it has moved inside the neckline levels of 8690,it still remains vulnerable to selling pressure at higher levels. It is likely that it sees some volatility again and in the given scenario, the levels of 8690 will become critically important to watch out for. Unless the Markets move well past the levels of 8825-8850, it will continue to remain heavily vulnerable to intermittent selling pressure at higher levels.

All and all, we might see the Markets continuing with its up move but we reiterate a word of caution. It is advised that unless the mentioned levels are breached on the upside, all up moves should be utilized to vigilantly protect profits at higher levels. Stock specific activities will continue and out performance from IT, Pharma and Auto stocks will continue.

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

www.EquityResearch.asia

http://milan-vaishnav.blogspot.com

+91-98250-16331 

milan.vaishnav@equityresearch.asia

milanvaishnav@yahoo.com

Daily Market Trend Guide -- Monday, October 03, 2016

MARKET TREND FOR MONDAY, OCTOBER 03, 2016

Though the equity markets on Friday ended the day with modest gains, we expect the Markets to remain in a capped range today. Though even if we see some intermittent technical pullbacks, the overall bias would remain negative and the levels of 8690 will act as stiff resistance to the Markets. The opening is likely to remain modest but intraday trajectory that the Markets form would dominate the trend for the day. Volatility cannot be ruled out.

For today, the levels of 8655 and 8690 will act as immediate resistance whereas the levels of 8560 and 8610 will act as supports.

The RSI—Relative Strength Index on the Daily Chart is 41.7661 and it remains neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD continues to trade bearish below its signal line.

On the derivatives front, the NIFTY October futures have shed over 9.92 lakh shares or 4.17% in Open Interest. This shows some offloading of long positions in the Markets.

Let us now have a look at pattern analysis. As mentioned in our Friday’s edition, the NIFTY has formed a Descending Triangle Pattern on the Daily Charts. The technical structure was weak for the short term anyway and the geopolitical tensions aggravated the effect. The Markets have clearly shown a downward breach from this descending triangle formation. It is also important to note that the neckline of 8690 that the Markets broke is also the 50-DMA. Therefore, even if we see technical pullback, this level will pose stiff resistance to the Markets on its way up.

We do not rule out any technical pullback but it becomes important to note that even with no geopolitical developments in the region, the technicals anyway remain bearish for the short term. Now, with any geopolitical tensions, if any, in the region, the negative effect may be magnified on the Markets. In any case, highly cautious mood will prevail and the pullbacks will limit up to 8690 levels. The descending triangle pattern will fail only if the Markets move past 8690 levels comprehensively. Until then, all pullbacks and up moves will meet with selling pressure from 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

www.EquityResearch.asia

http://milan-vaishnav.blogspot.com

+91-98250-16331 

milan.vaishnav@equityresearch.asia

milanvaishnav@yahoo.com