Thursday, January 17, 2013

Daily Market Trend Guide -- Thursday, January 17, 2013

MARKET TREND FOR TODAY                                                            January 17, 2013
The Markets had an disappointing session yesterday wherein it corrected from its key resistance levels, much on expected lines and ended the day with losses. The Markets opened on a negative note and gave its intraday high of 6055.95, in the very early seconds of the trade. Until the late afternoon trade, the Markets continued to trade in a band with modest losses but in the last hour and half of the trade, the selling pressure on the Markets intensified as it dipped further into the red as it gave its day’s low of 5992.05. The fall was lead by banking, auto and realty stocks. It finally ended the day at 6001.85 posting a net loss of 54.75 points or 0.90% while forming a lower top but higher bottom on the Daily High Low charts. 

Today, we might see some respite from the weakness we saw yesterday in the second half of the session. The Markets today are likely to open on a moderately positive note and look for directions. With the Markets not moving past the levels of 6050 yesterday, it is still very much in a broad trading range and thus intraday trajectory would continue to remain crucial to decide the trend for today.

For today, the levels of 6030 and 6055 shall act as immediate resistance for the Markets and the levels of 5950 shall act as immediate supports.

The RSI—Relative Strength Index on the Daily Chart is 58.6359 and it is neutral as it shows no negative divergence or failure swings. The Daily MACD is bearish as it has reported negative crossover and it now trades below its signal line.

On the derivative front, NIFTY January futures have shed over 9.71 lakh shares or 6.26% in total Open Interest. This signifies that there was long unwinding yesterday and not creation of fresh shorts. This is negative sign but it remains to  be seen if we see creation of fresh longs at any given levels.

The yesterday’s weakness was attributed to RBI Governor’s remark of the inflation being too high to consider any rate cuts. This lead to reaction in the rate sensitive stocks. However, this being discounted, and if we go strictly by the pattern analysis on the Daily Charts, the structure suggests that the Markets may continue to remain under range bound consolidation before it breaks out on the upside with a sustainable rally.

All and all, even with moderately positive opening expected, the Markets are likely to remain in a b road trading range. This will have some volatility ingrained in it. Unless the Markets breaks the levels of 5950 on the downside, there will be no technical weakness on the Charts. Overall, we continue to reiterate to avoid shorts and at the same time remain light and ultra selective  while taking long positions. While protecting profits wherever possible, cautious outlook is advised for today.

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


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