Friday, August 31, 2012

Daily Market Trend Guide -- Friday, August 31, 2012

MARKET TREND FOR TODAY                                                             August 31, 2012
The session yesterday on the expiry day of the August Derivative Series remained very volatile as the Markets opened on a negative note and traded in a capped range in volatile manner and saw a sharp bout of short covering towards the end of the session to end the day with modest gains. The Markets opened modestly negative and gave its intraday low of 5255.05 in the early minutes of the trade. This was against the support levels of 5251 mentioned by us. The Markets thereafter traded in a capped range, though remained very much volatile driven by rollovers. In the last half hour of the trade, the Markets saw a sharp rise on back of short covering and gave its intraday high of 5342.80. It finally ended the day at 5315.75, little off from its highs and ended the day with modest gains of 27.25 points or 0.52% while forming a lower top and lower bottom on the Daily High Low Charts.

Today, expect the Markets again to open on a moderately lower note and trade directionless in the initial trade. The Markets have held on to their support of 50-DMA which is 5255 and this shall continue to act as support and thus intraday trajectory would continue to play important part in deciding the trend for today.

The levels of 5255 shall continue to act as important support for the Markets today, being the 50-DMA. The weakness shall occur if the Markets dips below that, but until then, it is expected to remain in a range and equally volatile.

The RSI—Relative Strength Index on the Daily Charts is 51.3666 and is neutral as it shows no failure swing or any bullish/bearish divergence. The Daily MACD continues to trade below its signal line.

The NIFTY has reported less rollovers by 20% as compared to previous month, but has started the new series with PCR of 0.92%.

The Markets have another reason to remain volatile today as the Q1 GDP numbers are expected today and they are expected to remain dismal at 5.3-5.2%. However, any positive trigger will infuse momentum in the Markets. Also, FOMC meet would be watched but nothing is expected out of it as such with no material announcements coming in and this can lead to weaker sentiments in the global markets.

Having said this, so far as we are concerned, the Markets are expected to remain in a range, and also bit volatile and the levels of 5255 is expected to hold out as support. Further weakness will creep in only if it breaches these levels. Until this happens, volatility will stay and selective performance would be seen. However, Markets shall be devoid of any clear direction. It is advised to take fresh positions, but on a selective basis without too much of leveraging. Overall, cautious outlook is advised for today.

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


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