MARKET REPORT
September 05, 2013
Market had a smart recovery in the yesterday’s session as it
recouped half of the losses registered a day before as opened negative but
ended up with robust gains. The Markets opened on a modestly negative note and
made its day’s low of 5318.60 in the very early minutes of the trade. It
crawled back into the green in a short time after opening and kept gaining
strength gradually. It gave it’s day’s high of 5460.25 in the afternoon trade.
The Markets saw some mild profit taking again from those levels as it pared
some of its gains in the late afternoon trade. However, it recouped those
losses again and trade near the high point of the day in the end of the
session. It finally ended the day at 5448.10, posting a net gain of 106.65
points or 2% while forming lower top and slightly lower bottom on the Daily
High Low Charts.
MARKET TREND FOR TODAY
Today, under normal circumstances, the Markets are expected
to continue with its up move and open and trade positive at least in the
initial trade. However, the global markets suggest even a stronger opening and
the Markets may see a gap up opening and open near its pattern resistance
levels of 5525-5540. If it opens below this levels, these levels would act as
resistance and it would be critically important to see if the Markets sustain
the opening gains.
For today, the levels of 5500 and 5540 would act as
immediate resistance on the Charts. The supports come in at 5390 and 5355
levels.
All lead indicators continue to remain in place. The RSI—Relative
Strength Index on the Daily Chart is 45.7607 and it is neutral as it does not
show any bullish or bearish divergence or failure swings. The Daily MACD
remains bullish as it trades above its signal line.
On the derivative front, NIFTY has lost modest 1.72 lakh
shares or 0.92% in Open Interest. This shows that there was lot of short
covering after fall of day before. However, it would be important to see if
these gets replaced with fresh buying. However, this reduction of less than 1%
in OI is less significant.
With the above reading, we can fairly say that the yesterday’s
rise has not seen very sharp reduction of Open Interest. This can also be read
as replacement of shorts with fresh longs, with slight reduction in Open
Interest. Today, it is more likely that we will continue to see the up move
continuing.
All and all, it is likely that we open today on a higher
note and trade around the immediate resistance levels mentioned. In such
scenario the it would be critically
important for the Markets to sustain the opening levels. For this, intraday
trajectory that the Markets form after opening would be critically important.
It is advised to over expose while taking longs. Positions should still be
selectively taken and profits should be protected at higher levels as
volatility or mild profit taking from higher levels cannot be ruled out.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
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