MARKET TREND FOR TODAY
October 31, 2012
Disappointment with RBI Rate announcements of keeping Repo
and Reverse Repo Rates unchanged provided perfect reason to the otherwise
technically weak Markets to cry foul and breach it important support levels.
The Markets opened on a positive note and trade in a capped range in the
initial trade as it gave its intraday high of 5689.90 in the initial trade. The
Markets traded in a capped range until the RBI made announcements. The Markets
reacted negatively and this saw the weakness creeping in the Markets. The
Markets lost ground quickly and went on to give the day’s low of 5589.90,
breaching its important support levels of 5630. It never really recovered and
finally ended the day at 5597.90, posting a net loss of 67.70 points or 1.19%
while forming a lower top and lower bottom on the Daily High Low charts.
For today, expect the Markets to open on a flat and quiet
note and look for directions. It is likely that the initial trade sees
directionless movement with downward bias. The levels of 5630 that it broke yesterday
are likely to act as support in case of a technical pullback.
Today, the levels of 5630 would act as immediate resistance
followed by 5670 and the levels of 5540 would act as immediate support in form
of a small Double Bottom formation.
Lead indicators point towards continuing weakness, barring
some intermittent pullbacks. The RSI—Relative Strength Index on the Daily Chart
is 45.4048 and it has reached its lowest value in last 14-days which is
bearish. It does not show any bullish or bearish divergence. The Daily MACD
continues to remain bearish as it trades
below its signal line.
Having said this, in the yesterday’s trade, the NIFTY has
added in very nominal open interest of 0.5%. This shows that some minor shorts
were created in yesterday’s trade. NIFTY Open Interest PCR stands at 1.03 as
against 1.10.
If we go by pattern analysis, the NIFTY has broken its
support levels of 5630 and this is a immediate short term sell signal. However,
in case of technical pullbacks, or any intermittent pullbacks that we see, t he
upside is expected to remain limited and capped at 5630 which would now act as
resistance.
All and all, the bias on the Markets remain on the downside
unless it moves past 5630 levels which it
broke yesterday and sustains above those levels. Until this happens, we
may continue to see lingering weakness in the Markets with occasional technical
pullbacks. Fresh positions may be taken very selectively with continuing
cautious outlook in the Markets.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
