MARKET REPORT
June 19, 2013
Markets continued to see a very volatile session yesterday
and after moving in either direction, the Markets finally ended modestly
negative. The Markets opened on a modestly
negative note and continued to trade with capped losses. The afternoon trade
saw the Markets slipped further and it remained in negative trajectory until
the half of the session. However, the later afternoon trade saw a sharp
recovery in the Markets. The Markets not only recouped all of its day’s losses
but also went on to trade in positive territory as it gave its day’s high of
5863.40 in the late afternoon trade. However, this remained very brief. The
Markets failed to capitalize on this recovery. The recovery did not sustain as
the Markets pared all of its gains in equally fast manner and lost ground to
give the day’s low of 5804.30. It finally ended the day at 5813.60, posting a
net loss of 36.45 points or 0.62% while hanging on to its 200-DMA and forming a
higher top and higher bottom on the Daily High Low Charts.
MARKET TREND FOR TODAY
The analysis for today remains more or less on similar lines
as the Markets are expected to open on a flat to mildly negative note and look
for directions. The Markets have so far held on to its 200-DMA at Close levels.
The opening and behaviour of the Markets vis-à-vis the levels of 200-DMA would
be critical. The caution would continue to reign ahead of 2-day FOMC meet that
begins today, but the event remains more or less discounted.
For today, the levels of 5877 and 5908 which are the 100 and
50-DMA for the Markets respectively shall act as resistance. The levels of
200-DMA are expected to act as major support at Close levels.
The RSI—Relative Strength Index on the Daily Chart is
42.2094 and it is neutral as it shows no bullish or bearish divergence or any
kind of failure swings. The Daily MACD continues to trade below its signal line
and is therefore bearish.
On the derivative front, NIFTY June futures have continued
to add yet another over 7.57 lakh shares or 4.45% in Open Interest. It is also
important to note that BANKNIFTY and other key stocks too have continued to add
open interest significantly.
Given this reading, it is very very important to note that
even with selling observed in the cash markets, the derivatives have continuously
added the open interest. This is a very significant indicators that says that
massive shorts have been created on its way down yesterday. Further, at close
levels, the Markets have managed to maintain its support of 200-DMA which is
5805.40 today. So long as Markets continue to hold on to these levels at Close,
despite intraday swings, no much weakness may be expected. The shorts too are
likely to lend support at lower levels. The caution that we are seeing is
because of 2-Day FOMC meet begins today. The markets expect no tapering with
the Quantitative Easing measures.
All and all, the Markets shall remain in a broad trading
range until it moves past the levels of 5900-5910. The support of the levels of
200-DMA would be important. As mentioned yesterday, the fresh sustainable rally
would occur above 5910. However, importantly, wit the amount of shorts that are
being witnessed, we very strong recommend to avoid any short positions as short
trap can occur any time. Any weakness,
which would be temporary, should be used to make selective purchases or
liquidity should be maintained to hold current positions. Overall, cautious
optimism is advised.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
