MARKET TREND FOR TODAY
May 4, 2012
A weak Rupee took its toll on the Markets yesterday as the
Markets opened lower, saw some further bout of weakness towards the end and
finally ended the day with modest losses. The Markets opened on a lower note
but remained in a capped range for the most part of the session. It was heading
nowhere until in the late afternoon trade, it saw some more weakness creeping
in and went on to give its day’s low of 5180.65. IT however recovered a bit to
finally end the day at 5188.40, posting a net loss of 50.75 points or 0.97%. In
the process it has formed a lower top and lower bottom on the Daily High Low
Charts and the volumes traded yesterday remained below average.
Today’s session remain very critically important for the
Markets as the Markets are expected to open on a moderately lower note and look
for directions. As the lead indicators suggest, there are chances that the
Markets open lower but better themselves as the day progresses as there is no structural
breach on the Daily Charts.
For today, the levels of 5225 and 5260 are immediate
resistance on the Charts and the levels of 5142 and 5119 are major supports in
the form of 100 and 200 DMA respectively at Close.
The lead indicators suggests that the Markets are likely to
resist to weakness as the weakness seen off late in last couple of sessions is
due to external concerns and the factors are not technical. The RSI—Relative Strength
Index on the Daily Chart is 44.0277 and it does not show any failure swing. The
NIFTY has formed a new 14-day low but RSI has not and this is BULLISH
DIVERGENCE.
Both NIFTY and Stock futures have went on to add Open Interest
indicating existence and further creation of shorts in the system. Further, the
Markets still trades ABOVE its major averages (100 and 200 DMA) and the
positive crossover that these averages have reported has got more prominent.
All this indicate that there is very little or down major downside in the
Markets, speaking purely on technical grounds.
All and all, so far as today is concerned, as the F&O
data suggests, as the lead indicators indicate and Pattern Analysis showing no
negative breach on the Daily Charts, there are fair chances that the Markets
improves after opening on a moderately lower level. It is very strongly advised
to avoid shorts, maintain liquidity and hold to open positions. The shorts
should be strictly avoided as due to no structural breach on the Charts, there
are chances that one gets trapped at lower levels. Overall, cautious, but
positive outlook is advised for today.
Milan
Vaishnav,
Consulting
Technical Analyst,
+91-98250-16331
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