Daily Market Trend Guide -- Monday, February 29, 2016

MARKET REPORT                                                                                February 29, 2016

The Markets ended the day with modest gains after it moved up following the Economic Survey that was tabled in the Parliament today. The Markets saw a nearly gap up opening and formed its intraday high of 7052.90 in the early minutes of the trade. The morning session and the first half of the day saw the Markets slowing paring its opening gains. At one point in the first half of the session, the Markets pared majority of the opening gains to trade flat. The second half, though, saw some positive reactions from the Markets following the Economic Survey. The Markets saw some strength returning again and at one point of time, went near to its opening highs as it recovered again. It finally ended the day at 7029.75, posting a net gain of 59.15 points or 0.85% while forming a slightly higher top and higher bottom on the Daily Bar Charts.

MARKET TREND FOR MONDAY, FEBRUARY 29, 2016

The Markets managed to maintain the minor double bottom support levels at Close and ended the day on Friday with modest gains and remained in a broad trading channel. Today, the Markets brace itself to fact major external event, the Union Budget. Today’s opening is most likely to be on quiet to modestly negative note and it is expected to trade in a capped range until the Budget proposals start pouring in. The levels of 6970 at Close would be important to watch out for.

The levels of 7085 and 7120 are likely to act as immediate resistance levels for today. The supports come in at 6970 and 6860 levels.

The RSI—Relative Strength Index on the Daily Chart is 38.9032 and it stays 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 Weekly Charts, the Weekly RSI is 34.8494 and this too is neutral as it shows no bullish or bearish divergence or any failure swings. The Weekly MACD is Bearish as it trades below its signal line but it trades in “oversold” territory.

On the derivative front, the NIFTY March futures have shed over 1.62 lakh shares or 0.87% in Open Interest. Though the reduction in OI is not too large, but we can certainly see that the rise that we saw on Monday has got to do somewhat with short covering.

Coming to pattern analysis, the Markets have maintained and held on to its double bottom support at Close levels. Also, it now trades back into the broad trading range of 6900-7240 levels, though it trades more towards the bottom of the said range. It also becomes important to note that the Markets have major support in form of 200-Week DMA levels which coincides with the recent 52-week lows. Having said this, in the same breath, the levels of 6970 too would be important to watch out for at Close levels today. Given the pattern analysis, and the overall technical structure of the Charts, we can fairly conclude that if the Markets breach the levels of 6970 at Close, we will certainly see some more weakness but at the same time, it will counter one of the major support at current 52-week lows.

All and all, today’s session will certainly be a choppy affair and some amount of volatility will remain ingrained in the session today. However, looking purely at technical structure, if the Markets react negatively to the Budget proposals, major downside beyond the current 52-week lows look limited. It is advised to continue to remain light on overall exposures until the directional bias is established.

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
milan.vaishnav@equityresearch.asia
milanvaishnav@yahoo.com