Friday, November 2, 2012

Daily Market Trend Guide -- Friday, November 02, 2012

MARKET TREND FOR TODAY                                                   November 02, 2012
The Markets had a  relatively buoyant session yesterday, especially in the second half wherein it perked up yet again on back of short covering to end the day with modest gains after a subdued start. The Markets opened on a mildly negative note on expected lines and traded in a capped range in the morning trade while it gave its intraday low of 5601.95. However, after the late morning trade, the Markets came off its lows and recovered into the positive territory. It kept giving highs, though overall remaining in a capped range as it saw the levels of 5649.75 as its intraday high. It ended the day at 5645.05, posting a modest gain of 26.35 points or 0.45%  forming a higher top and higher bottom on the Daily High Low Charts.

Today would be critical session in the Markets. The Markets are likely to see a buoyant opening on back of positive global cues but at the same time shall open near its pattern resistance levels and thus it would be critically important to see if it sustains its opening gains. The intraday trajectory that the Markets shall form post opening today would be extremely important to see if the Markets are able to capitalize on the opening gains.

The levels of 5670 and 5710 shall act as resistance levels and the supports would now come at 5630 and 5560 levels.

The RSI—Relative Strength Index on the Daily Chart is 50.7387 and it is neutral as it shows no bullish / bearish divergence or failure swings. The Daily MACD continues to remain bearish as it trades below its signal line.

Having said this, it is important to note that NIFTY futures have continued to shed open interest by over 3.20 lakh shares or 1.86% and this clearly signifies that the rise that we saw was more of short covering than fresh buying. This trend – i.e. rise in NIFTY with shedding of Opening Interest, is being witnessed since last couple of session, especially last three sessions, clearly suggests that the Markets are just not completely out of the woods.

Having said this, it is likely that the Markets see positive opening and then transforms into a falling trajectory to come off its highs. This likelihood grows even more as the opening levels of the Markets that would be pattern resistance in form of falling trend line shown in the Charts.

All and all, buoyant opening is likely but it would be extremely important to see if the Markets sustains those opening gains and remains in positive rising trajectory for the day. Retail investors are advised to now avoid aggressive buying again and protect profits on either side. While remaining selective on the stocks, cautious approach is advised for today.

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


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