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Despite better than expected IIP data, the Markets badly came off its highs and closed with losses and in the process have formed a lower top and lower bottom on the Daily High Low charts.
Today, we are likely to see some respite from the weakness we saw and we are likely to see the Markets stabilize at lower levels due to favorable technicals and also due to important pattern support. For today, expect the markets to open on a flat note and look for direction. It is likely that the Markets may trade in a capped range on either side but are likely to stabilize at these levels.
For today, with the Markets expected to open flat, the levels of 5540 and 5595 are likely to act as resistance and the levels of 5470 and 5450 are likely to act as supports.
All the lead indicators continue to remain in place. The RSI—Relative Strength Index on theDaily Charts is 37.0893 and it shows no negative divergence or failure swings and is therefore neutral. The Daily MACD continues to trade below its signal line.
At this juncture, it is important to take a critical look at some things. The Markets have seen a massive built up of short positions in both NIFTY and Stock Futures.Even yesterday, massive open interest of 11.29% was added with the discount widening to 7points. This makes in evident that massive shorts are created in the Markets. Further more, there is a major pattern support in form of a trend line formed from 5177 levels which shows support at 5475 –5470 levels.
All and all, Markets had no reason to cry foul when it saw better than expected (even if it is QoQ) IIP numbers. Given this, with the huge shorts seen in the Markets and with the Markets trading near pattern supports, its again a matter of time that we see at least short covering and stability returns to the Markets. While strictly avoiding shorts, cautious outlook is advised for today.
Yesterday's trading session remained a listless session with positive consolidation as the Markets ended the day with modestgains and thereby forming a lower top but higher bottom on the Daily High Low Charts and thereby continuing to remain in consolidation mode on lower volumes.
For today, we may see the Markets opening on a mildly negative note and look for direction on back of soft Global Markets. With the Markets expected to open on a mildly negative note, as like in previous sessions, the levels of 5605 and 5640 shall act as resistance and the levels of5530 and 5480 shall continue to act as supports.
Alllead indicators continue to remain in place. The RSI—Relative Strength Index on the Daily Chart is 41.7793 and it does not show any negative divergence or failure swings and is therefore neutral.
The Daily MACD continues to trade below its signal line but is on its improvement course.
The Markets have been consolidation after making a low of 5472 and is suffering from a feature of typical lack of participation, i.e. lack of retail volumes, a sign typical to consolidation. However, in these couple of sessions, though the Markets have consolidated and remained in a range, the FIIs and DIIs have remained net buyers in both Cash as well as Derivative Segments. Also, massive call writing is observed at 5500 strike price which indicates a strong statistical bottom.
All and all, there are chances that we may see negative opening today, but at the same time, there is all likelihood that we may see improvement from lower levels as the day progresses. It is advised to strictly avoid shorts and use any dip to make selective purchases, while continuing to protect profits at higher levels. However, sustainable up move shall occur only after the Markets moves past the levels of 5600. Cautious optimism is advised for today.
The Markets in yesterday’s session had to end with moderate losses despite positive opening and trading with capped gains for the half of the session as the news of possible price hikes in fuel proved a damper amid low volume participation as the Markets continued to form a very little higher top and bottom on the Daily High Low Charts.
Even today, the Markets are likely to open on a flat to mildly negative note and look for directions, in absence of any triggers on either side.
With the Markets expected to open on a flat to mildly negative note, the levels of 5590 and 5625 shall continue to act as resistance andthe levels of 5510 and 5480 shall continue to act as supports.
All lead indicators continue to remain in place. The RSI—Relative Strength Index on the Daily Charts is 39.6415 and is neutral as it shows no negative divergence or failure swings. The Daily MACD Continues to trade below its signal line.
It i s important at this point to note that there is absolute lack of participation of retail volumes and in case of markets weakening from higher levels, this is aminor positive sign.
However, apart from possible fuel hikes, especially diesel which can have cascading effect on inflation, there is no other external negative factor. However, in the last three sessions, both FIIs and DIIs have remained net buyers andthere are no other triggers on the either side for the Markets.
All and all, in absence of any triggers, the Markets have continued to show potential reversals but will have to move past the levels of 5600 in order to confirm the potential reversals.
Until this happens, the continuation of stock specific approach with protection of profits at higher levels is advised as the lack of volumes remains a concern on back of lower retail participation. Cautious optimism advised.
The Markets ended on a absolutely flat note heading nowhere in the entire session with intraday volatility ingrained in it and in the process has formed a higher top and bottom on the Daily High Low Chart.
Today, expect the Markets to open on a flat note and look for directions. Intraday trajectory, like yesterday, shall be significant to decide the trend for today. With the Markets expected to open on a flat note, the levels of 5590 and 5625 shall act as resistance and the levels of 5510 and 5480 shall continue to act as support.
The Markets, after an attempt to make a reversal on Friday, have made a higher top and higher bottom on the Daily High Low Charts which is, though feeble and weak, but an attempt to continue with the reversal.
The RSI—Relative Strength Index on the Daily Charts is 40.2089 and is neutral as it shows no negative divergence or failure swings. The Daily MACD continues to trade below its signal line.
The Markets spent the day yesterday in absence of any triggers, positive as well as negative.
Technically speaking, the Markets have shown signs of bottoming out and has made a potential reversal as we saw discomfort at lower levels and short covering from those levels. However, another important point thatthat short covering should get replaced with fresh buying and for that volumes would play an critical role. In both of the previous session, especially yesterday, the volumes and participation has grossly remained a concern.
All and all with the lead indicators remaining intact and no negatives in the offing, the overall technical bias still remains on upside though volumes would be essential with positive intraday trajectory. Stock specific approach with cautiously positive optimism is advised for today.
After nine sessions of decline, the Markets finally attempted to rebound which was very much overdue and very evidently expected as mentioned in our Special Note (Edition dated Friday, 6th May), the Markets ended with gains and in the process have formed a similar top but higher bottom on the Daily High Low Charts.
Today’s session remains critically important for the Markets as the attempted reversal / bottom formation should get confirmed today in form of a higher top and bottom on the Daily Charts.
The Markets today are expected to open on a positive note and look for directions and it would be again critically important for the Markets to remain in rising trajectory to capitalize on the positive opening. For today, the levels of 5624 and 5670 shall act as resistance and the levels of 5525 and 5480 shall act as support.
The RSI—Relative Strength Index on the Daily Chart is 40.23 and it shows no negative divergence or a failure swing and is therefore neutral. The Daily MACD however still continues to trade below its signal line.
On Weekly Charts too, RSI is neutral as it show no negative divergence or failure swings. The MACD however, continues to remain in Buy mode as it trades above its signal line.
Friday’s session saw just 0.21% of addition in NIFTY Futures Open Interest which indicates there was more of short covering any very little fresh buying. However FIIs remained net buyers in F&O segment after nine days which is positive sign. DIIs continued to remain net buyers.
It is, therefore, critically important that the markets capitalizes on the positive opening that it is likely to get today. Stock specific purchases while protecting profits at higher levels may be continued. Though no clear signals / confirmation of reversal yet, the bias remains on the upside. Positive caution is advised.