Monday, January 27, 2014

Daily Market Trend Guide -- Monday, January 27, 2014

MARKET REPORT                                                                                          January 27, 2014
The Friday’s session weighed down heavily with multiple events coming up this week as the Markets opened lower, drifted further down and ended the day with losses. The Markets opened on a mildly negative note and formed its intraday high of 6331.45 in the early morning trade. Thereafter, the Markets never saw any strength coming in as it continued to drift lower. It traded sideways until the second half of the session and in the late afternoon trade, drifted even further lower to form the day’s low of 6263.90. After hovering around those levels for a while, it never really saw any recovery and ended the day at 6266.75, posting a net loss of 78.90 points or 1.24% while forming a sharply lower top and lower  bottom on the Daily High Low Charts.


MARKET TREND FOR TODAY

Beginning today, we have expiry coming this Thursday. More importantly, RBI shall come up later today with the Credit Policy and apart form this domestic event, there is two-day  FOMC meet beginning tomorrow and fear of tapering would weigh on the Markets. Given all this, we are likely to see a gap down opening today, however, the 50-DMA levels of the Markets would come again into play and it would be critically important to observe the behaviour of the Markets around these levels.

For today, the levels of 6310 and 6350 would continue to act as resistance and the levels of 6210 and 6175 would act as immediate support.

The RSI—Relative Strength Index on the Daily Chart is 50.9618 and it continues to remain neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD still continues to remain bullish as it trades above its signal line. On the Weekly Charts, RSI is 57.6893 and it continues to remain neutral. The Weekly MACD too remains bullish as it trades above its signal line.

On the derivative front, NIFTY January futures have shed over 13.01 lakh shares or 7.58% in open interest whereas the February futures have added over 5.32 lakh shares or 12.22% in Open Interest.

Going by the over all pattern analysis, today, the Markets are likely to test the 50-DMA once again, and given this scenario, if the Markets closed below the 50-DMA OR its filters it may bring in temporary weakness. However, if we read this along with the lead indicators, there are chances that the Markets finds its support near the 50-DMA or little below that within its filters and recovers from that. Given these fair chances, we may see selective stock picking happening from lower lowers and the Markets do not report a structural breach on the Daily Charts.

Overall above that is mentioned above, the Markets would also see itself reacting to the RBI Credit Policy and it is expected to do so after trading in a range in the morning trade. Given all this, it is highly recommended the once should still continue to refrain from shorts until the Markets breaches the critical support at close levels. Until this happens, we would continue to see selective stock buying from lower levels. Overall, while remaining light on positions and maintaining adequate liquidity, very selective stock picking may be done at lower levels.

Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331


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