MARKET REPORT
September 19, 2013
The Markets saw a sharp rise in last 40-odd minutes of trade
after it spent almost entire session in consolidation more as it move in
20-point range in the entire day, but ended the day with decent gains. The
Markets opened on a positive note but soon pared those opening gains and dipped
into the red to give the day’s low of 5840.20. It spent some time in the
negative territory and thereafter moved back into the green. The Markets spent
rest of the session in a very capped and narrow range. However, in the last
40-minutes of the trade, the Markets saw a sudden parabolic spurt. It saw
itself giving the day’s high of 5916.60 towards the end of the session. After
hovering around those levels for a while, it finally ended the day at 5899.45, posting
a decent gain of 49.25 points or 0.84% while forming a higher top and higher
bottom on the Daily High Low Charts.
MARKET TREND FOR TODAY
Today’s opening would be squarely guided by the outcome of
yesterday’s FOMC Meet. FOMC have decided not to pare with its QE easing from
September, but indicated that it would post pone it and it is expected to be from December. The
Markets will have a knee-jerk reaction and is expected to see a gap up opening.
However, it should be noted that QE has been postponed and NOT cancelled and
any gap up opening is likely to take the Markets near resistance levels and
would make it nearly overbought.
However, since gap up opening is expected, the immediate
resistance levels would be 6050 and 6075 levels and the support would now exist
at 200-DMA which is 5940.21 today.
The lead indicators continue to remain in place. The RSI—Relative
Strength Index on the Daily Chart is 61.7973 and it is neutral as it shows no
bullish or bearish divergence or any failure swing. The Daily MACD trades above
its signal line.
On the derivative front, the NIFTY September futures have
shed 3.05 lakh shares or 1.91% in Open Interest and stand along indicators
question the sustainability of the opening gains.
Given the above reading, the Markets are set to open on a
gap up note, but at the same time, would open near its resistance levels and
would be nearly overbought. Further to this, it is be be noted that the FOMC
has NOT indicated cancellation of QE3 easing but it has postponed. This is a happening
which would not be avoided. It is set to happen, if not now, then later.
All and all, given
this view, there would be certainly a knee jerk reaction to the Markets and the
Markets would certainly see a gap up opening. But it would be wise to see the
extent and the sustainability of such gap up opening. It is very much likely
that the Markets opens with this extent of gap up and then pares its gains.
Profit booking is very much likely at these higher levels and it is very
strongly advised not to initiate fresh purchases in even of a gap up opening
while maintaining very selective and ultra cautious outlook for the Markets.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
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