MARKET REPORT February 04, 2013
The Markets had an extremely bearish session yesterday wherein it spent the entire session in a downward falling trajectory and finally ended the day with a deep cut. The Markets opened on a negative note and immediately transformed itself into a falling trajectory and it remained like that for the entire session. The Markets kept sliding gradually and steadily and it went on to breach the 6000-mark as it formed its intraday low of 5994.45. Not even a feeble attempt of recovery during the entire session. The FII activity pattern of selling in cash segment and heavy shorting in the futures continued and the volumes remained lower than average across the board. The Markets finally ended the day at 6001.80, posting a net loss of 87.70 points or 1.44% while continuing to form a lower top and a sharply lower bottom on the Daily High Low Charts.
The Markets had an extremely bearish session yesterday wherein it spent the entire session in a downward falling trajectory and finally ended the day with a deep cut. The Markets opened on a negative note and immediately transformed itself into a falling trajectory and it remained like that for the entire session. The Markets kept sliding gradually and steadily and it went on to breach the 6000-mark as it formed its intraday low of 5994.45. Not even a feeble attempt of recovery during the entire session. The FII activity pattern of selling in cash segment and heavy shorting in the futures continued and the volumes remained lower than average across the board. The Markets finally ended the day at 6001.80, posting a net loss of 87.70 points or 1.44% while continuing to form a lower top and a sharply lower bottom on the Daily High Low Charts.
MARKET TREND FOR TODAY
Today’s session would be a very crucial session for the Markets. Following global weakness, the Markets are set to open on a lower note. With the Markets slated to open with a modest gap down, the two important technical things would occur simultaneously. One, the Markets would get immediately “oversold”, and two, it would test its all important support of 200-DMA. This would rise to two clear possibilities, one, the Markets would show resilience to the global weakness, OR, two, we may see improvement as we go ahead in the session.
For today, the levels of 6040 and 6090 are immediate resistance levels and the supports exist at 5973 and 5945 levels at Close.
The RSI—Relative Strength Index on the Daily Chart is 31.7321 and it has reached its lowest value in last 14-days which is bearish. It does not show any bullish or bearish divergences. The Daily MACD continues to trade below its signal line.
On the derivative front, NIFTY February futures have shed over 1.72 lakh shares or just around 1.72% in Open Interest. This shows that some offloading has certainly been done, but the extent has remained limited and not brutal.
Having said all this, it is clear that the Markets will have a lower opening today and the levels of 200-DMA would get certainly tested. The only thing remains to be seen is the Markets would get immediate “oversold” and having tested 200-DMA while getting oversold will certainly create a favourable circumstance for the Markets to either show a strong resilience or show a sharp rebound sooner or later. So far as US Markets go, the Dow has declined over 1300 odd points from its all time high, has slipped below its 200-DMA and that too not stays “oversold”. The worst of the weakness in the US Markets seems to be nearly over.
All and all, given the above reading, it is advised to stay away from aggressive activities in the Markets. Shorting remains out of question at these levels but aggressive buying too should be avoided. It is advised to continue to make very select buying while preserving liquidity and positions as chances of improvement after a weaker opening just cannot be ruled out .
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250 16331
