Daily Market Trend Guide -- Thursday, June 16, 2011

MARKET TREND FOR TODAY

The Markets yesterday ended on a nervous note ahead of RBI policy review and rate announcement and ended the day with losses forming lower top and lower bottom on the Daily High Low Charts.

For today, following global weakness and prevailing domestic caution, expect the Markets to open on a lower note. With the Markets expected to open on a lower note, while depending upon the intraday trajectory it forms may spend the session recovering in the second half.

For today, the levels of 5475 and 5525 shall act as resistance and the levels of 5405 and 5380 shall act as support levels.

The RSI—Relative Strength Index on the Daily Chart is 42.3886 and it does not show any negative divergence. However, it has reached its lowest value in last 14 days which is bearish. On the other hand, the Daily MACD continues to trade above its signal line and is therefore bullish.

The Markets have been trading extremely range bound and with relatively much lower volumes on concerns of inflation and the RBI’s stand vis-à-vis it and today, it is very much likely to react to the triggers.

The rate hike of 25 bps is almost discounted in these prices. Secondly, the Markets have added massive Open Interest in last couple of sessions and have wiped out the premium on NIFTY Futures indicating heavy creation of shorts. Furthermore, the advance tax payment numbers have almost negated the fears of slow down.

All this reading, and the reading of the technicals suggest it at all there is a weakness, it may be temporary one. There are chances of markets opening lower and recovering later. The lower levels may be used for making selective purchases. Positive caution is advised for today.

Milan Vaishnav,
Consulting Technical Analyst,
www.MyMoneyPlant.co.in
+91-9825016331
milanvaishnav@mymoneyplant.co.in
milanvaishnav@yahoo.com