MARKET TREND FOR TODAY February 05,
2013
Yesterday remained a thoroughly disappointing session for
the Markets as it opened and a buoyant note, traded buoyant in the initial
trade then pared all of its gains to end
the day with modest losses. The Markets opened positive and strong and it made
its day’s high of 6038.50 in the morning session of the trade. The Markets
traded sideways in the first hour and half of trade in a range bound trade but
the second half of the trade saw the Markets transforming themselves once again
into falling trajectory. The Markets came off its highs, pared its gains to dip
into the negative and gave day’s low of 5981.25. It finally ended the day at
5987.25 posting a modest loss of 11.65 points or 0.19% forming a lower top and
lower bottom on the Daily High Low Charts. The cut on the close charts has not
been deep but Markets came off nearly 60-odd points from day’s high.
Today, we are likely to see a weaker opening in the Markets
on back of weak global markets. The Markets are expected to open on a weak and negative note and look for directions.
However, the cut is not likely to be as big as other Asian peers as we have
already come off much from yesterday’s intraday high post weakness in the
European Markets.
For today, the levels of 5940 shall act as a important
support levels to watch for.
The RSI—Relative Strength Index on the Daily Chart is
48.1936 and it has reached its lowest value in last 14-days which is bearish.
However, 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, the derivative statistics paid slightly
positive picture. The NIFTY February futures have added over 5.96 lakh shares
or 4.74% in Open Interest. This trend has been witnessed also across all key
stocks. This very clearly signifies that there has been huge shorts created in
the system.
Having said this, as mentioned earlier, we have came off
over 60-odd points from yesterday’s intraday high. With today’s weaker opening
likely, the cut is not expected to be as big as other Asian Markets. Further to
this, the levels of 5940 are likely to act as major support levels. At this
point, the supports also exists in form of 50-DMA at close 5940.63.
All and all, even with the Markets testing these levels,
there will be no breakdown on the Daily Charts. Further, with heavy shorts
existing at current levels, if the Markets tests the levels of 5940, these would
come in as another supports and we may not see the Markets giving a negative
breakdown on Charts. Overall, while aggressive shorts should be avoided, any
downside should be utilized to make very selective purchases. There are chances
that we may see some improvement coming in after initial weakness. Cautious
outlook with tinge of optimism is advised for today.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
