MARKET TREND FOR TODAY March 27, 2012
FII selling continued in the Markets reportedly due to new GAAR (General Anti-Avoidance Rules) coming into effect from April 1st , which will make the P-note based transactions taxable as the Markets continued to slide despite no major trigger and continued to end yet another day with losses. The Markets opened mildly positive and gave its intraday high of 5274.95 in the very early seconds of the trade. However, immediately post opening, it dipped into the day remained weak throughout the session in a negative falling trajectory and went on to give the day’s low of 5174.90. It went on to end the day at 5184.25, posting a cut of 93.95 points or 1.78%. It has formed a lower top and lower bottom on the Daily High Low Charts.
Yesterday’s sell-off was mainly led by the confusion on GAAR as mentioned above. However, some clarifications issued yesterday late evening and some today morning are likely to instil some stability in the Markets. This is also likely to be aided with the global positive cues.
Also, most important to note that there is still no structural breach of any kind on the Charts as evident from above and the Markets still rules above its major support of its 200-DMA.
Taking all this into consideration, we can expect the Markets to open today much stronger and positive and are likely to trade strong, at least in the initial trade. It would be very critically important for the Markets to remain in the positive rising intraday trajectory to ensure it can capitalize on the stronger opening it is likely to get.
All lead indicators continue to remain in place. The RSI—Relative Strength Index on the Daily Chart is 42.2823 and it has reached its lowest value in last 14-days but it does not show any negative divergence. The Daily MACD continues to remain below its signal line.
Further to this, both NIFTY Futures and Stock futures have added Net Open Interest and thus this clearly signifies creation of fresh shorts in the Markets. These shorts and the levels of 5154 which is the 200-DMA of the Markets are all likely to offer major supports to the Markets and overall, the Markets may remain in a broad range of 5180-5400 trading band in this week until expiry. Any serious and significant breach shall occur only if the Markets breaches its 200-DMA which is very much unlikely. However, the volatility may remain due to disturbance caused by GAAR issue and also due to the expiry week that we have. This may keep the Markets range bound and also volatile with it seeing swings on either side. But given the technicals and the F&O data, the bias remains toward stability returning in the Markets.
All and all, it is continued to advised to maintain high degree of caution and aggressive positions, especially shorts should be avoided. Longs should be selectively taken and as always, profits be protected vigilantly. Overall, positive outlook, but with some degree of caution is advised for today.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
