MARKET REPORT
June 25, 2013
The QE concerns continued to take its toll on global markets
and India was no exception to that either as the Markets continued its slide to
end the day with losses. The Markets opened on a negative note following global
weakness and continued to remain negative throughout the session. After opening
on a negative note, the Markets traded with capped losses in the first half of
the session. The weakness intensified in the second half as the Markets drifted
further down. It went on to give the day’s low of 5566.25 towards the end of
the session. However, the Markets saw some recovery from those levels towards the
end and it finally ended the day at 5590.25, posting a net loss of 77.40 points
or 1.37%.
We are likely to see some respite from the weakness that we
have been seeing since last couple of days. This is because of two reasons,
First, the global Markets are trading steady and our Markets stands oversold
with the lead indicators showing resilience at these levels. HOWEVER, it is
important to note that the reason being the adjustments in the Markets across
the globe, there are times that the Markets defies the technicals. However,
expect a positive opening today and the Markets are expected to give a
pullback, at least in the initial session.
For today, the levels of 5640 and 5685 are immediate
resistance on the daily charts. The supports come in at 5535 levels in form of
a major pattern support in form of Double Bottom. Following that, the next
support come in at 5490 levels.
The lead indicators show signs of resilience again and may
aid to a possible pullback. The RSI—Relative Strength Index on the Daily Chart
is 30.8440 and this makes the Markets almost oversold. It does not show any
failure swings but the NIFTY has made a new 14-day low and the RSI has not and
this is certainly a BULLISH DIVERGENCE. The Daily MACD continues to remain
bearish as it trades below its signal line.
On the Derivative front, NIFTY Futures have added over 17
lakh shares in total Open Interest. This is further supported by figures that
the FIIs, despite remaining net sellers in the Cash Markets, have remained net
buyers in the F&O segment for over 1550 crores. This implies that another
huge chunk of shorts have been created in the Markets which is now likely to
lend support at these levels.
Having said this, it is important to understand that this is
the expiry week for the current derivative series. So, the session would surely
remain dominated with rollover activities. Further to this, as mentioned
earlier, Markets across globe are adjusting to a major external apprehension and
therefore, there would be times when Markets will continue to defy the
technical readings. However, they certainly point out to overall likelihood in
the Markets.
Overall, even with a slightest negative trade, the Markets
shall trade OVERSOLD. Further, it is very near to a important pattern support
and with such huge amount of shorts existing in the system, we continue to
sound caution and very strongly advice to refrain from creating shorts in such
Markets condition as Markets may see a sharp pullback any time, even if it
continue to remain in overall downtrend. It is very strongly advised to refrain
from shorts and maintain liquidity to protect current positions. Even selective
purchases can be made taking advantage of lower levels. However, very selective
approach with caution is advised for today.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
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