Daily Market Trend Guide -- Tuesday, May 06, 2014

MARKET REPORT                                                                                            May 06, 2014

The Markets stopped its 5-day losing streak yesterday as it ended the day yesterday on a minor green tick, though after lot of volatile movement during the day. The Markets opened negative and formed its intraday low of 6680.45 in the very early seconds of the trade. It crawled into the green immediately in the morning trade. The Markets remained in upward rising trajectory and kept forming gradual new highs. In the late afternoon trade, the Markets went on to form the day’s high of 6741.05. However, it was only now that the Markets changed its trajectory. It formed a downward falling channel and kept paring its gains gradually. At one point it pared all of its gains and traded flat. The Markets finally ended the day at 6699.35, posting a nominal gain of 4.55 points or 0.07% while forming a higher top but lower bottom on the Daily High Low Charts.

MARKET TREND FOR TODAY

Today’s analysis would remain more or less on similar lines as the Markets are expected to open with a mild up tick but there are chances that the Markets continues to remain in the corrective mode and it pares its opening gains as we go ahead in the session. The intraday trajectory would be important and despite the possibility of the technical pullback that the Markets may continue to witness the overall corrective state of the Markets may continue to persist.

The levels of 6725 and 6750 would act as immediate resistance for the Markets. The supports exist at 6655 and 6610 levels.

The RSI—Relative Strength Index on the Daily Chart is 52.0858 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 derivative front, the NIFTY May futures have added over 2.89 lakh shares or 2.25% in Open Interest. This signifies hat there has been some fresh shorts that have been created, mostly in the second half of the session. The NIFTY PCR stands at 0.92 as against 0.91.

The pattern analysis continue to paint the same picture. The Markets are likely to continue to remain in the corrective mode. However, given some fresh shorts in the system, it might witness some intermittent technical pullbacks in the immediate short term but overall structure still continue to point towards the correction in the Markets continuing for some more time.

All and all, despite mildly positive opening that is likely today, there are chances that the corrective activities in the Markets continue. Given the fresh shorts some intermittent pullbacks may be seen with some amount of volatility remaining ingrained in the Markets. Given this reading, any up tick should be utilized to protect profits and downsides should be utilised to make fresh purchases, but on very selective note. While continuing to remain moderate on the overall exposure, caution is advised for today.

 Milan Vaishnav,
Consulting Technical Analyst,
www.MyMoneyPlant.co.in
http://milan-vaishnav.blogspot.com
+91-98250-16331

milanvaishnav@mymoneyplant.co.in

milanvaishnav@yahoo.com