Daily Market Trend Guide -- Thursday, August 20, 2015

MARKET REPORT                                                                                             August 20, 2015

Markets continued to consolidate today with a positive bias as it recovered from the lows of the day to end the day with modest gains. The Markets saw negative opening on expected lines and formed the day’s low of 8425.95 in the morning trade. At one point while forming these lows, the Markets breached its 200-DMA intraday. However, very much on expected lines, the Markets spent the morning session recovering from the low point of the day. By afternoon, the Markets recovered all of its losses and further went on to trade strongly on the upside. It went on to form the day’s high of 8520.45 by afternoon, recovering nearly 95-odd points from the low point. The Markets then spent the second half of the session trading in a capped range in sideways trajectory. It came off a bit and finally ended the day at 8495.15, posting a modest gain of 28.60 points or 0.34% while forming a parallel bar on the Daily Bar Charts.

MARKET TREND FOR THURSDAY, AUGUST 20, 2015

The Markets have been giving parallel bars and consolidating on Daily Charts and therefore it continues to keep the analysis once again on similar lines. Today as well, while we keep the overall basis of the analysis same, we can expect somewhat negative opening in the Markets today. The Markets may once again see itself opening somewhere in between 200-DMA and 50-DMA and therefore the behaviour of the Markets post opening would continue to remain of critical importance.

For today, the levels of 8525 and 8560 will act as immediate resistance levels for the Markets. The supports come in at 8460 and 8410 levels.

The RSI—Relative Strength Index on the Daily Charts is 51.9445 and it remains neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD remains bearish as it continues to trade below its signal line.

On the derivative front, NIFTY August futures have added over 1.60 lakh shares or 1.13% in Open Interest. This signifies that modest longs have been initiated in the system.

Going by the pattern analysis, the Markets have been hanging on to its 200 and 50 DMA at Close levels after forming a potentially bearish Head and Shoulders formation. The neckline has been formed by proxy trend lines in form of 50-DMA and the Markets have so far managed to hold all of them as Supports at Close levels. The behavior of the Markets vis-a-vis these DMAs would be crucial to watch out for in immediate short term. It would of paramount importance for the Markets to hold on to 8380-8420 range in order to avoid any significant weakness in the near term.

Overall, today, with the negative opening expected, intraday trajectory would be critical for the Markets and would dictate the trend for today as well as for immediate short term. It is advised to refrain from taking any significant exposures and more liquidity should be maintained while limiting the purchases. Volatility will continue to remain; however, some improvement as we go ahead in the session can be expected. Cautious outlook is advised for today.

Milan Vaishnav,
Consulting Technical Analyst

Af. Member: Market Technicians Association, (MTA), USA
Af. Member: Association of Technical Market Analysts, (ATMA), INDIA
www.EquityResearch.asia
http://milan-vaishnav.blogspot.com

Consultant to:
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milan.vaishnav@equityresearch.asia
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