Friday, April 26, 2013
MARKET TREND FOR TODAY April 26, 2013
Yesterday was a session very typical to that of expiry day as the Markets opened positive and buoyant, traded sideways while it maintained gains, came off and rose again to end the day with strong gains. The Markets continued its buoyant move yesterday as it opened on a positive note on expected lines. It continued to gain strength until afternoon session but gradually came off from its highs in the second half of the session as it pared most of its gains. However, purely led by heavy short covering, the Markets saw a sharp parabolic rise in the last half hour of the trade as it went on to give the day’s high of 5924.60. It hovered around those levels for a while and finally ended the day at 5916.30, posting yet another gain of 79.40 points or 1.35%. The sharp parabolic rise of almost 50-odd points can be attributed to expiry led short covering. It continued to form higher top and higher bottom on the Daily High Low Charts.
A word of caution for the Markets here. The Markets are expected to open on a flat to mildly positive note and look for directions. However, it becomes very important to note that the Markets have rebounded over 400+ points in last couple of sessions. Any positive opening today will have it open around its strong pattern resistance and possibility of some minor correction cannot be ruled out.
For today, the levels of 5935 and 5960 shall act as major pattern resistance for the Markets today. The supports come in at 5820 levels.
The RSI—Relative Strength Index on the Daily Charts is 65.7369 and it has reached its highest value in last 14-days which is bullish. It does not show any bullish or bearish divergence. The Daily MACD remains bullish as it trades above its signal line.
Having said this, it becomes extremely important to note that the rise of 400+ points that we mentioned has come with consistent shedding of open interest in the derivative segment. This can be clearly read as massive short covering rally. These are the shorts that were created in the system when there was consistent selling in the Cash Markets while shorting in the derivative segment. Therefore, in spite of this rally, it becomes extremely important to see if these converts into fresh buying.
Overall, such continuation of parabolic recovery is unhealthy, especially with consistent shedding of Open Interest. Therefore, at these levels, there are strong possibilities of the Markets consolidating or see minor profit taking / correction. However, there have been some underperforming sectors which shall perform during this period. We continue to advice to remain highly selective while making fresh purchases and maintain high degree of caution on the long side.
Consulting Technical Analyst,
Monday, April 22, 2013
MARKET TREND FOR TODAY April 22, 2013
The Markets saw continuation of sustained pullback on back of heavy short covering as the Markets opened on positive note and ended the day with robust gains as it remain strong throughout the session. After opening on a positive note the Markets remained in a capped range moving sidewards in the entire morning session. However, in the second half of the session, it saw further strength coming in as it furthered its gains. It went on to give the day’s high of 5794.35 in the late afternoon trade. It hovered around those levels for a while and finally managed to end the day near the high point of the day as it maintained its levels. It ended the day at 5783.10, posting a robust gain of 94.40 points or 1.66% while forming a sharply higher top and slightly higher bottom on the Daily High Low Charts.
Today, technically speaking, since the Markets have ended the day near its high point, it is likely to open on a positive note and continue with its up move, at least in the initial trade. Expect the Markets to open on a moderately positive note and look for directions. The Markets have pulled back nearly 300-points and whiled doing so have shed open interest regularly.
For today, the levels of 5810 and 5835 shall act as immediate resistance on the Charts and the levels of 5740 and 5710 are immediate supports.
The lead indicators point towards continuation of up move, at least in the initial trade. The RSI—Relative Strength Index on the Daily Charts is 57.8103 and it has reached its highest value in last 14-days which is bullish. It does not show any bullish or bearish divergence. The Daily MACD is bullish as it trades above its signal line.
On the derivative front, the NIFTY futures have continued to shed Open Interest by over 14-19 lakh shares or 7.47% indicating strong short covering. These short covering has occurred as the Markets had added massive open interest on its way down.
Having said this, as mentioned earlier, the Markets have pulled back nearly 300-odd points and while doing so has shed open interest significantly. This clearly indicates that the pullback is on account of short covering and not on fresh buying. It requires to be very keenly observed to see if this short covering is replaced by fresh buying in order to sustain and continue with the current ongoing up move.
All and all, there are chances that the Markets can open on a moderately positive note but at the same time, there are equal chances that we may see some minor profit taking later today or in coming session. The possibility of the Markets consolidating or seeing some minor profit taking just cannot be ruled out given the technical and derivative data reading. Keeping this in view it is advised to approach the Markets with cautious outlook until some consolidation happens.
Consulting Technical Analyst,