MARKET TREND FOR TODAY
June 03, 2013
The Markets had a deep correction on Friday but absolutely
on expected lines as it opened on a negative note, remained negative and weak
throughout the session and ended the day with a deep cut. The Markets opened
weak following weak global cues and even weaker technicals, the Markets traded
with losses in the first half the session. Though the Markets traded with
losses, the movement remained more or less sideways with the losses remaining
slightly capped and in a range. However, in the second half, the weakness in
the Markets intensified as the Markets drifter further on the downside. It went
on to give the day’s low of 5975.55 towards the end of the session. No serious
recovery was seen as the weakness sustained towards the end. The Markets
finally ended the day at 5985.95, posting a deep cut of 138.10 points or 2.26%.
Going strictly by the technicals, the Markets are all set to
continue with its corrective activities. Expect the Markets to open on a flat
to mildly negative note and look for directions. Intraday trajectory would be
crucial and the weaker global cues are likely to contribute to the further low
drifting for the Markets. The Markets are likely to test the levels of another
pattern support and its 100-DMA.
Today, the levels of 6020 and 6055 are likely to act as
resistance for the Markets. The supports are expected to come in at 5935, which
is a pattern support and further down at 5897 which is the 100-DMA of the Markets
today.
The lead indicators clearly continue to point towards
continuation of corrective activities. The RSI—Relative Strength Index on the
Daily Chart is 47.9306 and it has reached its lowest value in last 90-days,
which is Bearish. Also, RSI has set a new 14-period low whereas NIFTY has not
yet and this is Bearish Divergence. The Daily MACD continues to remain bearish
as it trades below its signal line. On the Weekly Charts, the RSI is 55.8273
and it is neutral as it shows no negative divergence or failure swings. The
Weekly MACD remains bullish as it trades above its signal line.
On the Derivative front, NIFTY June futures have shed over
24.28 lakh shares or massive 13.81% in Open Interest. This is a very clear
indications there has been very clear unwinding and offloading of positions on
Friday and no shorts have been created. This is very clear and significant
indication that that the Markets are all likely to drift lower.
Overall, the technical indicators very clearly suggest that
the Markets are likely to see corrective activities continuing in the Markets.
If this happen, as mentioned earlier here, the Markets are likely to test its
pattern support and further its 100-DMA levels of 5935 and 5897.
All and all, the Markets may continue to see correction and
global weakness shall aid to it. The GDP numbers announced on Friday have
remained at 10-year low and this is obviously have not gone down well with the
Markets. We might see some technical pullback in the interim / intraday, but
the technical indicators and the F&O data very clearly suggest continuation
of correction in the Markets in the immediate short term. Overall, while
protecting profits wherever possible, cautious outlook is advised for today.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
