Tuesday, December 4, 2012

Daily Market Trend Guide -- Tuesday, December 04, 2012

MARKET TREND FOR TODAY                                                              December 04, 2012 
The Markets consolidated yesterday on expected lines, but  it remained equally volatile and traded in a very tight range to end the day with minor losses. The Markets opened on a positive note and gave its intraday high of 5899.15 in the very early minutes of the trade. Thereafter, it transformed itself into falling trajectory and kept losing ground steadily, though with intermittent recovery bouts. The Markets attempted to recover to briefly trade into the green in the afternoon trade, but lost ground again go give day’s low of 5854.60. It again recovered from those levels and finally ended the day at 5870.95, posting a minor loss of 8.90 points or 0.15%, while still forming a higher top and higher bottom on the Daily High Low charts.

Today, expect the Markets to open on a moderately negative note and look for directions. The consolidation / corrective activity shall continue in the Markets and we are likely to see the Markets continue to correct. Though the trade may remain range bound with some volatility, intraday trajectory shall continue to remain critically important.

For today, the levels of 5900, 5925 shall continue to act as resistance while supports come in much lower at 5820 and 5760 levels.

Lead indicators point towards mixed trade with little more bias towards the possibility of consolidation / minor correction continuing. The RSI—Relative Strength Index on the Daily Chart is 70.5178 and it continues to trade in “OVERBOUGHT” territory while being neutral with no failure swings or bullish / bearish divergences. The Daily MACD continues to trade above its signal line. 

On the Candles, A Spinning Top has occurred. When this occurs during a rally or near highs, which is the case with NIFTY, it shows possibility of a short term weakness creeping in to the Markets.

On the Derivatives side, the NIFTY futures has added little over 3 lakh shares or 1.58% in Open Interest whereas the turnover in the Derivative segments lowered significantly.

To sum up, the pattern analysis of the Charts, and with the Markets being in “OVERBOUGHT” territory, there are clear chances that we see the Markets continue with its corrective activities. No fresh up move shall occur until the Markets move past 5930 levels. Also, it shall closely watch the developments in the Parliament with voting of Retail FDI hanging in balance.

All and all, overall corrective activities shall continue and the Markets shall react to news on Retail FDI, and also no up move shall occur on technical grounds until the Markets move past the levels of 5930. Since currently the Markets are “OVERBOUGHT”, it is advised to refrain from fresh buying. Overall, continuance of cautious outlook is advised for today.

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


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