Daily Market Trend Guide -- Monday, November 09, 2015

MARKET REPORT                                                                         November 09, 2015

The Markets ended virtually unchanged after a positive opening and oscillating in a very narrow range for the entire session while the caution continued to weigh high on the Markets. The Markets saw a positive opening but as it has been doing it in the past, it formed its intraday high of 8002.65 in the early hours of the trade. However, as expected, the Markets did not capitalize on this positive opening and soon pared all of its gains in the morning trade. It came off its highs and even dipped into the negative territory. The Markets headed literally nowhere as it then continued to oscillate in a completely direction less manner. The Markets spent rest of the session trading in such narrow range. However, the late trade saw the Markets forming the day’s low of 7926.15. Again, some recovery was seen and the Markets settled the day at 7954.30, posting a negligible loss of 1.15 points or 0.01% while continuing to form a lower top and lower bottom on the Daily Bar Charts.

MARKET TREND FOR MONDAY, NOVEMBER 09, 2015

Markets will have a sentimental drawdown to Bihar Results and are expected to open on a gap down note, probably near its support zone of 7800-7850 levels. However, the Markets have already corrected nearly 400-odd points from 8350 to 7950 levels and therefore we can expect that there can be some amount of recovery post opening, especially in the second half. The reason of this hope of recovery in the later part is that the Markets had already expected and digested such outcome to some extent.

For today, the levels of 7975 and 8020 are immediate resistance for the Markets. The supports exists at 7880 and 7840 levels.

The RSI—Relative Strength Index on the Daily Chart is 38.0591 and it has reached its lowest value in last 14-days which is bearish. It does not show any bullish or bearish divergence or any failure swings. The Daily MACD remains bearish as it continues to trade below its signal line. On the Weekly Charts, the Weekly RSI is 43.7442 and it remains neutral as it shows no bullish or bearish divergence or any failure swing. The Weekly MACD has reported a negative crossover and it now trades below its signal line.

On the derivative front, the NIFTY November Futures have shed over 4.01 lakh shares or 2.10% in Open Interest. There are very clear indications that good amount of short positions exist in the Markets. The NIFTY PCR stands at 0.83 as against 0.86 levels on Friday.

Coming to pattern analysis, the today’s gap down opening will cause the Markets to breach one more of its pattern support levels, this time in the form of a rising trend line. However, it is important to note that the Markets have already seen the decline of over 400-odd points over last fortnight and today’s opening is most likely to see the shorts positions being covered from lower levels. The short covering and recovery from lower level is likely but the timing of the same remains highly uncertain. However, probability remains that the Markets show resilience post lower opening and some short covering may lead the Markets to recover in the later part of the day.

Given this picture and analysis, the Markets do have some amount of hopes of recovering in the later part of the day. However, the undertone has certainly turned bearish following the Bihar outcome and also the probability of still impending rate hike from the Fed. Overall, even if there are chances that the initial dip may be bought into, we continue to advise to remain clear of the Markets and avoid any significant exposure at buying. Limited purchases at lower levels with great degree of caution 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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