Tuesday, December 18, 2012

Daily Market Trend Guide -- Tuesday, December 18, 2012

MARKET TREND FOR TODAY                                                        December 18, 2012
The Markets had an disappointing session yesterday as it spent the entire session in a falling channel and finally ended the day with modest losses. The Markets opened on a  flat to mildly positive note and gave its  intraday high of 5856.05 in the early minutes of the trade. However, immediately thereafter, the Markets transformed itself into falling trajectory and remained liked that for the rest of the session. The Markets kept losing ground gradually and went on to give the day’s low of 5850.15. It neve saw any recovery towards the end and it finally ended the day at 5857.90, posting a modest loss of 21.70 points or 0.37% while forming almost a parallel bar with slightly higher bottom on the Daily High Low Charts.

Today is again expected to be no different. The Markets are expected to open on a flat to mildly negative note and look for directions. However, today, RBI is coming up with monetary policy and the Markets would react to its Rate Announcements wherein 25bps is widely expected. Apart from this, overall, the Markets continues to remain in corrective mood.

For today, the levels of 5900 and 5950 continue to act as immediate resistance on charts. Supports come in at 5820 and 5775 levels.

All lead indicators continue to point towards continuing weakness in the Markets. The RSI—Relative Strength Index on the Daily Chart is 59.3183 and it has reached its lowest value in last 14-days, which is bearish. Also, RSI has set a new 14-period low where as NIFTY has not yet, and this is “Bearish Divergence”. The Daily MACD too has reported a negative crossover as it now trades below its signal line, which is a bearish sign.

On the derivative front, NIFTY Futures have continue to shed nominal open interest by 35,000 shares of nominal 0.16%. NIFTY PCR stands at 1.04 as against 1.06.

Again, as we have been mentioning in our previous edition of Daily Market Trend Guide, no serious up move is expected until the Markets move past the levels of 5950. Until this happens, it is bound to trade in a range and thus some amount of volatility shall remain ingrained in it. Today, the Markets are also set to give knee jerk reactions to  RBI Announcements later in the day. Barring this, it is likely  to remaining in overall corrective mode.

All and all, continuation of cautious outlook is advised. The Markets shall react positively to rate cuts, if any, otherwise broader markets continue to remain in corrective mood. While avoiding aggressive positions, selective approach should be continued while protecting profits on either side vigilantly. 

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


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