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The Markets had a terribly disappointing session as it once again succumbed to global weakness despite OVERSOLD technicals and ended the day with sizable losses thereby continuing to form a lower top and lower bottom on the Daily High Low Charts.
Today, the global cues and the domestic technicals present a very contradictory picture. The Markets are likely to see a gap down and weak opening again following ongoing global weakness but at the same time, as has happened in the past, the markets are also expected to offer some resilience to the weakness.
Initially, the Markets are likely to give a weak opening today following global weakness and is likely to trade weak in the initial trade. For today, the levels of 4890 and 4850 are likely to act as supports and the levels of 495 and 5060 are likely to act as resistance on the upper side.
At this juncture, we need to consider few important points. Amidst such continuing external factors causing weakness, it may continue to happen that the Markets defies the domestic technicals and continues to behave in contravention of the technical indicators. However, looking at technical indicators certainly help as it definitely poses resilience and pullback with slightest of the trigger.
The RSI—Relative Strength Index on the Daily Chart is 25.7112 and it shows no failure swing. However, NIFTY has set a new 14-period low whereas RSI has not and this is BULLISH DIVERGENCE. On the Candles, Engulfing Bearish Pattern has occureed and if this occurs during an downtrend which is the case with NIFTY, it may be a last engulfing bottom which indicates a BULLISH REVERSAL. Also, both Stocks and NIFTY Futures have reported heavy addition of Open Interest. All and all, having considered all this, it is advised to refrain from taking any fresh positions, especially shorts as the Markets are long overdue for a pullback which may be caused by short covering. It is best advised to sit through this weakness by maintaining liquidity and thus, a cautious outlook is advised for the day.
The Markets had a extremely volatile session as it moved over 130-points intraday to end the day with modest gains. The Markets opened on a positive note and after initial sluggish move, pulled back sharply. It gained over 80-odd points from the previous close. Just when it seemed that we are seeing a much overdue pull back, it pared all of its gains. It recovered a bit again to end the day with modest 0.48% of gain and in the process have formed almost a parallel bar on the Daily High Low Charts.
Today, we are again set to see a sluggish direction-less session, but with a positive bias. Today, expect the Markets to open on a mildly negative note and look for directions and again, like yesterday, the intraday trajectory that it forms as well as the volumes will play a critical part in sustaining any effort of a pullback.
For today, the levels of 5090 and 5145 shall act as resistance levels and the levels of 5015 and 4980 shall continue to act as supports.
All lead indicators continue to point towards a over due pullback. The RSI--Relative Strength Index on the Daily Chart is 29.8291 and is neutral as it shows no negative divergence or failure swings. However it continues to trade in OVERSOLD zone. The Daily MACD trades below its signal line.
Also, the NIFTY Futures have added 1080150 shares or 4.59% in Open Interest which indicates creation of short positions.
Having said this, with some amount of short positions seen and with the lead indicators continuing to trade OVERSOLD, it is advised to refrain from taking any short positions in the Markets. It is best advised to maintain liquidity and protect positions and make selective purchases as the Markets definitely trades with a pullback now long overdue. Positive caution is advised for today.
The Markets had a disappointing session again with itfailing to capitalize on its positive opening as it again pared all of its opening gains to end the day with losses forming a lower top and lower bottom on the Daily High Low Charts.
Today, we are likely to see flat to subdued and mildly negative opening in the Markets but there are technical indications that the Markets may improve as the session progresses.
The Markets are expected to open flat to mildly negative and are likely to improve, but again the volumes and in the intraday trajectory that it forms would play a critically important role as the Markets shall need both — good participation as well as positive intraday trajectory.
For today, the levels of 5080 and 5140 shall act as resistance an the levels of 5005 and 4980 are likely to act as supports.
The RSI—Relative Strength Index on the Daily Chart is 27.8399 and it is now trading in OVERSOLD zone and it does not show any failure swings. The NIFTY has set a new 14-day low but the RSI has not. This is BULLISH DIVERGENCE.
The MACD continues to trade below its signal line but is too is moving towards being OVERSOLD.
Having said this, in yesterday’s session, the NIFTY futures premium of 5-points got transformed into discount of 2-points and with this, the NIFTY Futures have added over 13% in Open Interest signifying big addition of short positions in the Markets. Further to this, with thelead indicators trading OVERSOLD with bullish divergence, we are all likely to find bottom at these current levels and see some technical pullback which has been long overdue.
All and all, even in case of temporary weakness, it is strongly advised to refrain from taking any short positions. Stock specific activities are likely to continue. While some selective buying may be done, it is advised to maintain vey selective stock specific cautiously positive outlook for the day.