Daily Market Trend Guide -- Monday, September 17, 2012

MARKET TREND FOR TODAY                                                         September 17, 2012

The Markets gave a buoyant reaction to the QE easing from the US and more to the Diesel price hike in the Friday’s session as it opened with a big gap up, strengthened its gains during the session and ended the day with very robust gains, for 8^th day in a row. The price hike in diesel has been seen as a bold step towards fiscal consolidation. The Markets opened with a gap up and during the day it went on to give the day’s high of 5586.65. It finally ended the day near the high point of the day at 5577.65, posting a robust gain of 142.30 points or 2.62%. It has formed a sharply higher top and higher bottom on the Daily High Low Charts.

Markets may see positive and strong opening again today. On Friday, the Markets reacted strongly and positively to the QE Easing and hike in Diesel prices. Today, stage is set for yet another positive and strong opening as a reaction to reforms unleashed further by the Government in form of approvals for disinvestments, and approval of FDI in retail and hike of FDI limits in aviation and broadcasting sectors.

The levels of 5630 are immediate resistance for today in form of a major Double Top.

The RSI—Relative Strength Index on Daily Chart is 74.3066 and it has reached its highest value in last 14-days which is bullish. But it has now in OVERBOUGHT  zone. The Daily MACD continues to trade above its signal line. On the Weekly Charts too, the RSI is 63.2836 and it has reached its highest value in last 14-days. The Weekly MACD also continues to trade above its signal line.

Having said this, there are some important factors too to be kept in mind. There is NO DOUBT that the Government has successfully unleashed reforms and this is what exactly that was required to remove policy paralysis at the Centre. Now it remains to be seen that such proactive measures by the Government are not rolled back in coming days.

Further to this, it is also to be noted that the Markets are now in OVERBOUGHT zone. Today’s positive opening would see the Markets rising over 400-points in straight nine sessions. Also, this would take it further deep into OVERBOUGHT territory.

In such circumstances, the Markets may continue to inch up but at the same time, it is getting dangerous for retail investors at these levels. No doubt, strength will remain in the Markets but the sectoral out performance may be seen. At the same time, investors may also see some intermittent bouts of profit taking seen which can be equally sharp and the levels of 5360 would act as major resistance in the Markets.

All and all, good opening is certain in the Markets today, but at the same time, consolidation and some bouts of profit taking may not be ruled out. There are chances that after the opening gains, the Markets may see little profit taking, if not today, then tomorrow. It is strongly advised to the retail investors that aggressive blind purchases may be avoided and fresh purchases may be done selectively. Though with a tinge of caution, positive outlook is advised for today.

 Milan Vaishnav,
Consulting Technical Analyst,
www.MyMoneyPlant.co.in
http://milan-vaishnav.blogspot.com
+91-98250-16331

milanvaishnav@mymoneyplant.co.in

milanvaishnav@yahoo.com