MARKET
TREND FOR WEDNESDAY, NOVEMBER 02, 2016
NIFTY ended
flat yesterday after coming off from its intraday highs in the last hour and half
of the trade making evident the quantum of caution that we had highlighted in
our yesterday’s edition. Today, we are likely to see a weak opening following
weakness in the global markets. Today’s opening is likely to test the 100-DMA
of the NIFTY. There are all chances that we see opening lower than 100-DMA,
however, some resilience and improvement from lower levels as the day
progresses cannot be ruled out.
While the
levels of 8645 and 8675 will act as immediate resistance levels, the levels of
8565 and 8510 will act as important supports.
The RSI—Relative
Strength Index on the Daily Chart is 45.6039 and this remains neutral as it
shows no bullish or bearish divergence or any failure swings. The Daily MACD
stays bearish as it trades below its signal line.
On the
derivative front, the NIFTY November futures have shed over 3.88 lakh shares or
2.19%in Open Interest. Offloading of long positions at higher levels was
evident. The NIFTY PCR stands at 0.97 as against 0.99.
Coming to
pattern analysis, the NIFTY continued to resist to the upper line of the
falling channel that it has formed from 8968 levels. With the falling nature of
this trend line, the resistance level too keep reducing and therefore the
levels of 8970 and then the 50-DMA above it remain a sacrosanct resistance for
the Markets. Given the potential lower
opening today, the NIFTY will go on to test its 100-DMA and probably levels below
that. If the NIFTY closes below 100-DMA, it will send the NIFTY into more
intermediate weakness in the near term.
All and all,
with the lower opening very much likely, the behavior vis-à-vis the levels of
100-DMA will be critical to watch out for. NIFTY is likely to show some
resilience at levels below 100-DMA but in any case, it will require to trade
above 100-DMA as early as it can to avoid any serious weakness from creeping
in. We advice to refrain from major shorts at lower levels as some improvement
near or from below 100-DMA cannot be ruled out. Volatility will remain
ingrained in the session. Cautious view while remaining very light on overall exposure
is advised for the day.
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
+91-98250-16331 / +91- 70164-32277
