MARKET TREND FOR TODAY April 16, 2012
The Markets got a bad test of “Algorithmic
Trading” as it saw a vertical 70-odd point slide in NIFTY as it saw basket
selling by 2 FIIs on Friday following trivial news on mining, more than
expected borrowing by Spain and grim monetary outlook. The question was not to
the reaction of such news, but the manner in which the Markets saw totally
unexpected basket selling dragged the otherwise positively consolidating
Markets to its day’s low of 5185.40. The Markets had opened positive and had
given day’s high of 5306.75 in the morning trade. Thereafter, it had traded
flat after paring of morning gains on low volumes. The Markets saw a vertical
slide of 70-odd points in just 25-seconds, faster than a human brain can
comprehend. Following this “systemic abuse”, the Markets finally ended the day
at 5207.45, posting a loss of 69.40 points or 1.32%. In the process, it has
formed a higher top and higher bottom on the Daily High Low Charts. For week ending Friday, the Markets have
ended the week with net loss of 115.45 points or 2.16%.
Today would be the crucial session for the
Markets as the Markets shall be reacting to the Inflation numbers to be
announced later today and also to the RBI Monetary Policy tomorrow. However,
given the overall technicals of the Markets and its current status also read
along with the F&O Data the Markets are less expected to see any serious downside – system abuses
like that of Friday being excepted.
For today, expect the Markets to open on a
moderately lower note. The intraday trajectory would be critical today also and
it is likely that the Markets opens moderately lower and then improves as the
levels of 5146, which is the 200-DMA and one of its major supports is in
striking distance. Further, as of today, there is no structural breach / pattern breach on the Charts.
The RSI—Relative Strength Index on the
Daily Charts is 44.8633 and it continues to remain neutral with no negative
divergences or failure swings. The Daily MACD continues to trade below its
signal line. RSI on the Weekly Chart is
50.2337 and that too is neutral with no negative divergence or failure swings
and the Weekly MACD continues to trade bullish, above its signal line.
Further, it is important to note that if we co-relate Rupee’s movement on Friday, it did not depreciate
further along with Market losses, which it should have otherwise, and in fact
closed with minor gains. Secondly, NIFTY Futures have went on to add over 4
lakh shares in Open Interest indicating creation of shorts and not unwinding.
Stock Futures also added in Net Open Interest.
The above is read along with the technicals
on the Charts where the Pattern Analysis still shows the Markets continuing to
remain in a broad range with no negative breach on the Charts.
All and all, having said this, there is no
technical signal to suggest any bearish / negative breach on the Charts. The
Markets trades above its critical support levels and any intermittent weakness
should be used to make selective purchases. While avoiding shorts, stock
specific, cautiously positive approach is advised for today.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
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