Monday, October 1, 2012

Daily Market Trend Guide -- Monday, October 01, 2012

MARKET TREND FOR TODAY                                                               October 1, 2012
The Markets had a relatively buoyant session on Friday as it opened positive and remained positive throughout the session and also ended the day on a positive note . The Markets opened on a strong note and gave its intraday high of 5735.15 in the morning trade. However, post giving this high, the Markets gradually drifted from its day’s high in the rest of the session. It finally ended the day at 5703.30, still posting a decent gain of 53.80 points or 0.95%. It formed a higher top and higher bottom on the Daily High Low Charts.

Today, expect the Markets to open on a flat note and look for directions. With all indicators pointing towards consolidation or impending minor correction, the Markets are likely to see a capped range on the upside. The intraday trajectory would be important for today and the Markets are strongly expected to either consolidate or see a minor correction.

For today, the levels of 5710-5750 shall continue to act as immediate resistance for the Markets and the immediate supports are at 5630 levels.

The RSI—Relative Strength Index on the Daily Chart is 72.1770 and it does not show any failure swing. However, the NIFTY has set a new 14-day high but the RSI has not and this is “BEARISH DIVERGENCE” on the Daily Chart. The Daily MACD continues to trade above its signal line. On the Weekly Charts, though the RSI has just reached its highest value in 14-days, the Candles shows formation of  a ”A Spinning Top” which shows potential formation of a top and the chances of weariness creeping in.

Both NIFTY and Stock futures have continued to add in net Open Interest.

Having said this, if we take global cues into account we have been best performer among peers in the global markets on Friday. However, we have all theoretical chances of seeing some weakness creeping in today.

All and all, if we see the overall technical indicators and structure of the Charts, we are not expected to see a run away rise in the Markets. Even if it occurs, it would be greatly unhealthy rise as given the structure of the Charts, some consolidation or correction would be imminent in order to make the Markets healthy. Any rise should be used in exiting long positions and profits should be guarded on either side. While maintaining very selective approach, cautious outlook is advised for today.

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



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