Monday, January 16, 2012

Daily Market Trend Guide -- Monday, January 16, 2012 (Published in the morning before the Markets opened)

MARKET TREND FOR TODAY                                                            January 16, 2012

The Markets had a volatile session of Friday as it opened in positive territory and traded positive but saw volatile movement during the session on Friday, but still ending the day on a positive note. The Markets opened on a positive note, but soon pared its morning gains to trade flat, mildly in the positive. Thereafter, the Markets saw itself giving high of 4898.95 in the afternoon trade. It pared all of its gain again in the later afternoon trade, but again recovered to end the day at 4866, posting a gain of 34.75 points or 0.72%. In the process, it formed higher top and higher bottom on the Daily High Low Charts. The Markets ended the week with net gains of 119.10 points or 2.51%.

For today, expect the Markets to open on a negative note and look for directions. Markets shall react to external news flow such as cutting of sovereign ratings in Europe and also the domestic news flow such as Inflation number to be announced later today. Even technically speaking, we may see the consolidation of the Markets to continue with the Markets trading in a broad range of 4800-4936.

For today, the levels of 4900 and 4940 shall act as resistance with the levels of 4800 continuing to act as immediate support. The RSI—Relative Strength Index on the Daily Chart is 56.9696 as it shows no failure swings. However, the NIFTY has given the new 14-period high whereas the RSI has not and this is Bearish Divergence. The Daily MACD continues to trade above its signal line and is bullish. On the Weekly Charts, the RSI is neutral as it shows no negative divergence or failure swings. The Weekly MACD is bearish as it trades below its signal line.

From the above technical reading, it can be fairly concluded that this week too, most probably, we shall see some consolidation in the Markets to continue and this will keep the Markets in a broad range of 4800-4950 while also keeping it bit volatile. The Markets may see some immediate weakness but 4800 levels may see some support coming in. The Markets will have to remain above 4800 to avoid any further weakness.

Having said this, NIFTY and other key NIFTY components have added overall open interest and this shall aid the Markets to remain in range and avoiding any major weakness. We continue to advice to refrain from aggressive positions on either side. Very selective stock specific activities would be seen. Selective purchases may be made while vigilantly protecting profits at higher levels. Overall, cautious outlook is advised for today.

Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331


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