MARKET REPORT October
30, 2013
The Markets reacted very positively to the RBI Credit Policy
announcements as it remained in line with market expectations. The RBI raised
Repo rate by 0.25%, reduced MSF rate by 0.25% while keeping CRR unchanged. The Markets
ended the day with robust gains after this. After opening negative and forming
day’s low of 6079.20 in the early minutes of the trade, the Markets shot up
post policy announcements. It kept making new highs while rising steadily. It
went on to give the day’s high of 6228.30 and finally ended the day at 6220.90,
posting a robust gain of 119.80 points or 1.96% while forming a lower top but
sharply higher bottom on the Daily High Low Charts.
MARKET TREND FOR TODAY
As evident from the charts, the Markets have once again
tested the resistance zone of 6230-6250 levels. Today’s session remains very
critically important as Markets are expected to open on a modestly positive
note and attempt a breakout. In this case, the intraday trajectory that the
Markets form would be extremely critical to see if the Markets are able to move
past the critical resistance zone of 6230-6250 and sustain above that.
For today, the levels of 6250 and 6275 would act as
immediate resistance for the Markets. The supports come in much lower at 6160
and 6110 levels.
The lead indicators show little tiredness in the Markets.
The RSI—Relative Strength Index on the Daily Chart is 64.8339 and it does not
show any failure swings. However, the NIFTY has set a new 14-day high, but RSI
has not and this is Bearish Divergence. The Daily MACD too has continued with
its negative crossover and is currently bearish as it trades below its signal
line.
On the derivative front, total Open Interest in NIFTY
futures have shown a decline. This signifies that there has been short covering
as well in the Markets. DIIs have remained net sellers to the tune of over Rs.
854 crores yesterday.
Going by the pattern analysis and reading leading indicators
along with this, there are chances that the Markets may not give a clear
breakout today. Even if it opens higher on the positive side, the intraday trajectory
would be critically important and there are chances that we might again see
some profit taking creeping in at higher levels.
All and all, it is critically important for the Markets to
move past the major resistance zone of 6230-6250 levels comprehensively and
sustain above that. Until this happens, the Markets would constantly remain
under risk of witnessing correction from higher levels. It is advised to keep
making selective purchases but also equally vigilantly keep protecting profits
at higher levels. Over exposure is not advised in current Markets. Positively
cautious approach is advised for today.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
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