MARKET OUTLOOK FOR WEDNESDAY, SEPTEMBER 27, 2016
Domestic equity markets had a thoroughly disappointing
session as it posted worse-than-expected performance yesterday and ended the
day with a deep cut. Today, we once again expect a soft start to the Markets.
Though some attempts to stabilize at current levels will be seen, two readings
stand established on Daily Charts. First, though there is no structural breach
on the Daily Charts as yet, the levels of 8968 have been confirmed as an
immediate top for the Markets; and second, the levels of 8900 have been marked
as a “lower top” on the Daily Charts. The levels of 50-DMA which is 8680 will
be crucial level to watch for.
For today, the levels of 8760 and 8825 will act as immediate
resistance levels while the supports will come in at 8700 and 8660 levels.
The RSI—Relative Strength Index on the Daily Chart is
48.2820 and it has reached its lowest value in last 14-days which is bearish.
Also, RSI has set a fresh 14-period low whereas NIFTY has not yet and this is
Bearish Divergence. The Daily MACD stands bearish as it trades below its signal
line. A Falling Window (a gap) on the Daily Charts makes it even more
likely that we may see some more weakness persisting for some time.
On the derivative front, the NIFTY September futures have
shed over 63.49 lakh shares or 20.26% in Open Interest. The October futures
added over 56.22 lakh shares or 178.55% as rollovers were visible in the
session.
Pattern analysis clearly confirms the level of 8968 as the
immediate top for the Markets. After nearly 100% retracement from the breakout
levels of 8700-8730, retracement again to these levels from 8900 markets this
as the lower top on the Daily Charts. Due to this development, once again the
attention shifts to the critical support area of 8700-8730 and the subsequent
support levels of 50-DMA which is 8680. Any breach below the 50-DMA mark will
bring in more weakness for the intermediate term.
Overall, Markets continues to trade above all of its Moving
Averages and therefore there is no structural breach on the Charts as yet. However,
as mentioned, the levels of 50-DMA will be critical support levels at Close to
watch out for. Some more weakness may creep in if these levels are breached.
The rollovers will continue to keep the session choppy and volatile. We will
continue to see out-performance from IT, select Pharma and MidCapt stocks.
Milan Vaishnav, CMT
Technical Analyst
(Research Analyst, SEBI Reg.
No. INH000003341)
Member:
Market Technicians Association, (MTA), USA
Canadian Society of Technical Analysts, (CSTA), CANADA
Association of Technical Market Analysts, (ATMA), INDIA
http://milan-vaishnav.blogspot.com
+91-98250-16331
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