Daily Market Trend Guide -- Tuesday, January 05, 2016

MARKET REPORT                                                                                January 05, 2016

Following global weakness, the Markets had a thoroughly disappointing session as it opened on a resilient note but then ended the day with a deep cut in line with its peers. The Markets saw a lower opening but it did show resilience as well. At one point of time in the morning trade, the Markets had managed to recover chunk of its opening losses while it formed its intraday high of 7937.55. However, it was the rest of the session that proved to be grossly disappointing one. The Markets started to pare recovered points once again and this time remained in falling trajectory for the rest of the session. While remaining in falling trajectory, the Markets kept making gradual lows. It went on the breach the important intraday supports while it formed its day’s low of 7781.10. It finally settled the day at 7791.30, posting a net loss of 171.90 points or 2.16% while forming a lower top and sharply lower bottom on the Daily Bar Charts.

MARKET TREND FOR TUESDAY, JANUARY 05, 2015

Markets may see some breather from the weakness that it saw yesterday but at the same time, some amount of bearish undertone is likely to persist for the immediate short term. The Markets are set to open on a quiet note and look for directions. It has breached certain levels yesterday and on the way up today, they are likely to pose some resistance to the Markets.  The Markets have penetrated the support of rising trend line and this is likely to pose resistance to the Markets going ahead.

For today, the levels of 7840 and 7875 will act as immediate resistance for the Markets. The supports come in at 7740 and 7715 levels.

The RSI—Relative Strength Index on the Daily Chart is 45.9819 and it remains neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD stays bullish as it trades above it signal line.

On the derivative front, the NIFTY January series have added over 8.04 lakh shares or 4.14% in Open Interest. This clearly indicates addition of fresh shorts in the system.

Coming to pattern analysis, we have been mentioning often in our previous edition of Daily Market Trend Guide that the levels of 100-DMA and 8000, have remained sacrosanct. These levels once again continued to remain major resistance for the Markets. In yesterday’s session, the Markets have violated one important pattern support. This pattern support is in form of a rising trend line drawn from the lows of the Markets which it formed in September 2015. The Markets have violated this support and therefore in event of any pullback, this level might pose some resistance to the Markets.

All and all, volatility and uncertainty will rule the Markets in the immediate short term. With the yesterday’s downside, the structure of the Charts have somewhat got damaged to some extent and it will a while by the time the Markets gathers its momentum on the upside once again. The levels of 7840-7860 will continue to pose resistance in event of any pullback. It is advised once again to remain very selective on stocks and curtail the overall exposures in the Markets for the immediate short term.

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

+91-98250-16331
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