Daily Market Trend Guide -- Friday, October 23, 2015

MARKET REPORT                                                                                October 23, 2015

Keeping in line with the analysis carried out the Markets continued to consolidate as it ended the day with nominal losses after recovering from the low point of the day. The Markets saw a positive opening which was better than expected. After opening on a positive note, the Markets strengthened further to form the day’s high of 8294.40. After trading briefly in the sideways trajectory the Markets started to gradually pare its gains. By afternoon trade, the Markets had not only come off its highs but dipped into negative as well. It further went on to form the day’s low at 8217.15. Markets came off some 77-odd points from the high point of the day. However, the second half of the session saw some recovery as well. The Markets were able to recover much of its losses by the end of the trade. It finally settled at 8251.70, posting a nominal loss of 9.95 points or 0.12% while forming a parallel bar on the Daily Bar Charts.

MARKET TREND FOR FRIDAY, OCTOBER 23, 2015

Markets will open today after a holiday yesterday and on Wednesday’s session, it has held on successfully to its pattern support of 8230-40 range and have ended above that. Today, we are set to see a strong and nearly gap up opening today following positive global cues. The cues have been positive following ECB’s surprise comments while reviewing its QE in December. Leaving this apart, the Markets have been displayed resilience while consolidating in previous sessions.

For today, the levels of 8295 and 8340 will act as immediate resistance for the Markets. The Supports will come in a t8230 and 8170 levels.

The RSI—Relative Strength Index on Daily Chart is 61.3643 and it remains neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD remains bullish as it trades above its signal line.

On the derivative front, the NIFTY October futures have shed over 5.45 lakh shares or 2.78% in Open Interest. This continues to show some amount of unwinding of long positions as well as some short covering from the low point of the day. The NIFTY PCR stands at 1.05 as against 1.04.

Coming to pattern analysis, the Markets have been in congestion zone for over couple of sessions how. The levels of 8230-40 have been its important pattern support in event of any downside. If the Markets breach this support on the downside, it may slip once again in to the broad consolidation zone that it has been trading in this entire month. Keeping this aside, today’s likely gap up opening is likely to cause the Markets open near its resistance levels. It would be very much important to see if the Markets are able to maintain and capitalize on these gains. The Markets may move ahead to test its 200-DMA in short term if today’s opening gains are maintained and capitalized. Also, in the same breadth, given the F&O data, the Markets also remain somewhat vulnerable to get sold into at higher levels once again.

Keeping this in view, until the Markets gives a clear directional breakout on the upsides with good volumes and participation, all these up moves and higher openings should be primarily be used to book and protect existing profits. Going further, if any consolidation is seen then any minor dips should be bought into on a very selective basis. Shorts should be refrained from. Overall, continuance of 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

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