Thursday, June 6, 2013

Daily Market Trend Guide -- Thursday, June 06, 2013

MARKET REPORT                                                                                      June 06, 2013
The Markets had an utterly volatile session as traded in either direction, however took support near its 100-DMA and finally ended the day with negligible gains. The Markets opened on a negative note on expected lines and soon drifted further down to give the day’s low of 5883.70. However, in the late morning trade the Markets came off its highs to trade flat. This recovery did not last longer as the Markets saw pressure building up again in the afternoon trade as it pared all of its recovery. In the afternoon trade, the Markets again attempted to recover and recovered again to trade marginally in the positive. The Markets spent rest of the session trading in a very capped and narrow range in sideward trajectory and headed no where, though it sustained its recovery from lower levels. It finally ended the day at 5923.85 posting a negligible gain of 4.40 points or 0.07% forming a lower top and lower bottom on the Daily High Low Charts.


MARKET TREND FOR TODAY
Today, expect the Markets to open on a negative note following weak technicals and even weaker global markets. The weak global markets shall aid more to the negative opening though speaking purely on technical grounds, there are chances that our Markets offer resilience post weak opening. The opening of the Markets shall be around its 100 or 50-DMA again and therefore the trajectory that it forms shall be critical. Any further weakness down its 100-DMA or 50-DMA shall induce further weakness.

The levels of 5896 which is the 100-DMA and the level of 5877 which is the 50-DMA of the Markets shall act as supports for the Markets. As mentioned above, any breach below this would make the Markets further weak.

The lead indicators continue to have a mild downward bias. The RSI—Relative Strength Index on the Daily Chart is 43.9344 and it is neutral as it shows no negative divergence or failure swings.  The Daily MACD continues to remain bearish as it trades below its signal line.
On the derivative front, NIFTY June futures have continued to shed over 2.55 lakh shares or 1.90% in Open Interest. This signifies that the recovery had not seen any fresh buying coming in and might be more due to short covering. However, there has been net unwinding of the long positions. All major Stocks too have reporting shedding of open interest with the rise in prices.

Having said this, it is also important to note that the weakness was imminent as the movement of USD-INR was also not in sync with the recovery in the Markets. The Markets, therefore are slated to open near any of the two DMAs (100 and 50) and therefore, its intraday trajectory and behaviour vis-à-vis these two DMAs would continue to be very important.

All and all, there are chances that post weak opening, we may see a range bound trade or even some minor recovery from lower levels. Also, there are chances that if these two DMAs are breached, we may see some more weakness, however, the chances of Markets showing resilience are more.  Given this condition, it is advised no to go on short selling spree and take aggressive positions on the short side, on the contrary, profits should be protected. With any signs of minor pullbacks, selective purchases may be considered keeping overall exposure light. Overall, cautious outlook with mild optimism is advised for today.

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


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