A SPECIAL NOTE November 17, 2011
The Markets had an extremely volatile session yesterday wherein the NIFTY moved nearly 200+ points intraday to end the fifth session into the red on a heavy volume and continued to form a lower top and lower bottom on the Daily High Low Charts.
The purpose of this Special Note is to bring few points to the notice. Yesterday, the Markets opened on a lower note and remained so for the entire session but the Markets made an attempt to recover in the last hour of the trade. The Markets recovered all of its morning losses in the later afternoon trade. But exactly at that point of time, the Markets saw a very violent and sudden fall and saw the NIFTY losing over 80-odd points in span of just 5 minutes. Just after that, in next remaining half hour or so, it recovered over 100-odd points from that low to give a new day’s high. This is extremely artificial and “controlled” movement of the Markets which almost entire media failed to give reason of or failed to analyse the cause. We need to bring to the notice of the investors that the Markets, in last couple of session, is deliberately moved and controlled by few entities, big enough to manipulate the system. A systemic weakness has again been abused by few big FIIs and the regulator, as always, will fail to curtail this at this time too. NIFTY saw movement of 200-points in span of just half hour giving both highs and low of the day in the same time frame.
It is sad to know that it is the retail small investor, who again, as always, bears the burnt of such systemic abuses.
For today, we will gain see the Markets opening on a subdued note. For today, the levels of 5005 and 4980 shall continue to act as supports and the levels of 5070 and 5125 shall act as resistance as per the charts. The RSI—Relative Strength Index on the Daily Chart is 41.7944 and it has reached its lowest value in last 14-days which is bearish. However, it does not show any negative / bearish divergence. The Daily MACD continues to trade below its signal line.
Having said this, the NIFTY Futures have shed 13,18,900 shares in open interest which shows short covering from lower levels. Further, the NIFTY Put to Call Ratio (PCR) has dropped to 1.13 from 1.21. This signifies that though NIFTY has shed open interest, there is discomfort around 5000 levels and 5000 Call to have added massive open interest and thus, this level is likely to act as statistical support.
IT IS IMPORTANT to note that the Markets have been defying all technical inputs from the Charts and this is possible only when it is being influenced by few big players while abusing the system. In such case, it is advised to refrain from taking aggressive positions on either side, specifically avoiding shorts as there can be a short trap as the Markets may see sharp short covering. While avoiding shorts, a cautious outlook is advised for today, as so far as technicals are concerned, Markets should have a limited downside given the pattern and F&O statistics. Cautious optimism is advised.
Milan Vaishnav,
Consulting Technical Analyst,
+91-9825016331
