MARKET REPORT January
06, 2014
The Markets survived a scary session on Friday as it broke
below its 50-DMA after opening on a negative note but finally recovered from
its lows to end the day with negligible losses. The Markets opened on a
modestly negative note as expected and after trading with capped losses in the
morning trade, slipped further down to form a day’s low of 6171.25. However,
the second half of the trading session saw the Markets recovering from its day’s
lows. It recovered major part of its gains until the end of the session. It
finally managed to end the day at 6211.15 recovering over 50-odd points and
posting a negligible loss of 10 points or 0.16% while forming a lower top and
lower bottom on the Daily High Low Charts.
MARKET TREND FOR TODAY
With the 50-DMA being 6193 today, today’s analysis again
remains more or less on similar lines like Friday. We are expected to see a
flat to mildly subdued opening today and the Markets will once again trade near
its 50-DMA. Like Friday, it would be of critical importance for the Markets to
maintain levels above of 50-DMA and maintain closing levels above that to avoid
any weakness.
Today, the levels of 6250 and 6285 are immediate resistance
on the Daily Charts. The support exist at 6193 and 6150 levels on the downside.
The RSI—Relative Strength Index on the Daily Chart is
48.5232 and it is neutral as it shows no bullish or bearish divergence or any
failure swings. The Daily MACD remains bearish as it trades below its signal
line. On the Weekly Charts, RSI is
56.2077 and it is neutral with no divergences of failure swings. The Weekly
MACD continues to remain bullish as it trades above its signal line.
On the Derivative front, the NIFTY January futures have shed
17.52 lakh shares or 8.82% in Open Interest. This shows that the recovery that
we saw on Friday from lower levels was more on account of short covering rather
than any fresh buying. It would be important to see if this no translates into
fresh buying or not.
Give the pattern analysis and the F&O Data, the Markets
will not show any significant weakness creeping in so long as it manages to
trade above the levels of 50-DMA. The Markets have successfully kept its head
above 50-DMA at Close levels on Friday and it is important it continues to do
so.
All and all, the Markets may open mildly weak, but there
will be no structural breach on the Charts so long as it is trading above its
50-DMA and its filters. Any weakness will keep the Markets in a capped range.
Some amount of volatility may also be seen. It is still advised to continue to
refrain from shorts as some sectoral out performance would continue. While
remaining light on positions, cautiously positive outlook is advised for today.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
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