MARKET TREND FOR TODAY
May 03, 2013
Ahead of RBI Credit Policy today, the Markets had a very
robust session yesterday as it opened flat but strengthened throughout the
session to end yet another day with decent gains. The Markets opened on a flat
note and kept building strength by adding gains in the morning session as it
went on to give the day’s high of 6019.45. It move the second half into
sideways trajectory but did not pare it gains. It came off from its highs a bit
but was more or less successful in
maintaining those gains and finally ended the day at 5999.35, posting a robust gain of 69.15
points or 1.17% while forming a higher top and higher bottom on the Daily High
Low charts.
Today, expect the Markets to open flat and look for
directions. The Markets shall violently react to the RBI Credit Policy due
later in the morning today. The Markets are expected to trade in a range until
then and start reacting once the RBI comes out with its announcements. The
Markets are pitching in for 50 basis points cut, but it is also likely to react
to the macroeconomic report which does not paint a rosy picture.
For today, the levels of 6035 and 6050 are immediate
resistance levels on the charts and the supports come in much lower at 5940 and
5920 levels.
The RSI—Relative Strength
Index on the Daily Chart is 68.4870 and it has reached its highest value in
last 14-days which is bullish. However, it does not show any bullish or bearish
divergence. The Daily MACD is bullish as it continues to trade above its signal line.
Candles show potential creation of top for the Markets. An engulfing bullish line occurred If the engulfing bullish
pattern occurs during an uptrend (which appears to be the case with NIFTY), it
may be a last engulfing top which indicates a top. The test to see if this is the case is if the
next candle closes below the top of the current (white) candle's real body.
On the derivative front,
NIFTY has added a over 21.91 lakh shares or over 13.26% in Open Interest.
However, though this is a positive sign, any significant up move shall make the
Markets OVERBOUGHT.
Having said this, there
are mixed signals, speaking purely on technical terms. The lead indicators show
some potential still left on the upside, the candles show a potential top formation. However, if we read the
fundamentals along with this, the markets may react to the macroeconomic
concerns and also the RBI policy and this is likely to be a volatile affair.
Even if the Markets gains in the initial trade, it would trade around its
overbought levels again.
All and all, even if the
Markets gains in the initial session, ahead of RBI Credit Policy announcements,
there are very high chances that we may see correction from higher levels. Any
up move that is seen from today onwards should be used for booking and
protection of existing profits and aggressive buying at these levels should be strictly avoided. It is
advised to approach the Markets with high degree of caution from today onwards
until a healthy consolidation or correction is seen.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
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