MARKET TREND FOR FRIDAY, JANUARY 20, 2017
The Equity Markets on Thursday continued to remain range
bound as expected on the projected lines. The benchmark NIFTY50 ended the day
with minor gains of 18.10 points or 0.22%. We expect the Markets on Friday to
once again open on a quiet note and once again continue to see range bound
consolidation. It is extremely important to note that though the domestic
markets are exhibiting positive bias, the spiking bond yields in the US is
likely to put a check on the NIFTY’s up move. Moreover, it is yet to move past
the 100-DMA and 8440-8460 zones and this is likely to put the Markets some more
time into consolidation.
For today, 8460 and 8495 will continue to act as immediate
resistance levels for the Markets. The
supports will come in at 8390 and 8335 levels.
The Relative Strength Index on the Daily Chart is 67.3950
and it has reached its highest value in last 14-days which is bullish. It does
not show any bullish or bearish divergence. The Daily MACD stays bullish while trading
above its signal line. On the Candles, no significant formation has been
observed.
On the derivatives front, the NIFTY January series have shed
over 3.62 lakh shares or 1.76% in Open Interest. This signifies some minor
profit booking at higher levels. However, the figures do not reflect or point
towards any major sentiment change in the Markets.
While having a look at pattern analysis, it remains evident
that the Markets have been consolidating after moving past its 200-DMA levels.
This further establishes 200-DMA as the interim immediate support for the
Markets in event of any ranged consolidation. On the other hand, the NIFTY has
been resisting to its 8435-8460 zones which also includes the 100-DMA level as
well. On the Weekly note, the set up remain buoyant but the Daily Charts
exhibit some possibilities of the NIFTY oscillating in a defined range. The
Bollinger Bands on the Daily Charts are 45.16% wider than normal. This suggests
higher-than-normal volatility in NIFTY. Therefore, the probability of the
volatility decreasing and the NIFTY remaining in a trading range has increased.
Overall, the Charts present a mixed picture. Though the
current set-up certainly looks buoyant, external technical factors like the
spiking bond yields in the US and other technical indicators may put the
Markets into some more time into range bound movement. Fresh up move shall only
occur with Close above 8460 levels. Shorts should be avoided given that fact
that the NIFTY continues to trade above its critical supp ort levels and the
undercurrent remains intact. Major directional bias may be taken after Close
above 8460 levels and until then stock specific strategy should be adopted in
the Markets.
Milan Vaishnav, CMT
Technical Analyst
(Research Analyst, SEBI Reg. No. INH000003341)
Member:
Market Technicians Association, (MTA), USA
Canadian Society of Technical Analysts, (CSTA), CANADA
+91-98250-16331
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