Daily Market Trend Guide -- Friday, October 07, 2011 (Published in the morning before the Markets opened)

MARKET TREND FOR TODAY

The Markets had a very volatile session moving 50-60 odd points in either direction twice as it ended the day with moderate losses ahead of a trading holiday yesterday and in the process have formed a lower top but slightly higher bottom on the Daily High Low Charts.

However, the volumes on Wednesday have remained dismally low which is, is  fact, a positive sign as it indicates less participation in the consolidation stage.  The Markets have, so far, held the support levels in the range of 4720-4740 in the form of triple bottom.

For today, expect the Markets to open on a strong note and continue to remain so in the morning session. In order to capitalize on the positive opening, the Markets will have to open on a stronger note and thereafter, sustain its positive trajectory and will have to be supported with volumes.

The RSI—Relative Strength Index on the Daily Chart is 36.9934 and it has reached its lowest value in last 14-days, but it does not show any negative divergence. The MACD on the Daily Chart is bearish as it trades below its signal  line, but is moving towards giving a positive crossover again.

The Markets have shed very nominal open interest which shows no significant unwinding has been done. Also, the Markets have held the triple bottom supports of 4720-4740 three times and this has now become immediate supports for the Markets.

Further to this, the low volumes in last two sessions have further brightened the return of stability and some pullback today as there have been minimal participation in the Markets.

All and all, given the very much favorable technicals and supported by positive global cues, the Markets are set to open on a stronger note and remain so for the rest of the session critically depending on the trajectory as well as the volumes. Stock specific purchases will continued to be seen. While protecting profits at higher levels, positive caution is advised.

Milan Vaishnav,
Consulting Technical Analyst,
www.MyMoneyPlant.co.in
 +91-9825016331
milanvaishnav@mymoneyplant.co.in
milanvaishnav@yahoo.com

Special Edition -- Daily Market Trend Guide -- Wednesday, October 05, 2011 (Published in the morning before the Markets opened)

MARKET TREND FOR TODAY – A SPECIAL NOTE                                               October 05, 2011.

The Markets had a terrible session yesterday wherein the NIFTY came off over 150-odd points from its day’s high to touch the low of 4728.30, but recovered a bit to end the day at 4772.15, posting a loss of 77.35 points or 1.60%.

Having said this, we wish to draw attention to certain important points.

Yesterday’s panic reaction came in after Moody’s announcement to downgrade SBI. It is important to note that the Moody’s downgrade is nothing but a convenient and dishonest and bias view of the system for ones own convenience. As very nicely analysed by many of the good fundamental analysts, Moody’s downgrades is likely to draw flak as some of the European banks whose conditions is much worse than SBI enjoys better rating by Moody’s. This raises question mark over authenticity and transparency of Moody’s policy and methodology. SBI just did not deserve such a downgrade and would have certainly escaped this downgrade had that been a “European Bank”.

It is very important to note that this juncture that such uncontrolled announcement by such rating agencies have always acted as a convenient measure for FIIs who themselves indulge in bargain hunting after such sharp reactions. It is only the retail investor that gets hurt in such an event. It makes the picture more evident that the Markets are mainly controlled by few big entities and they sharply influence the Market movements as per their own convenience. One fails to understand what wrong can happen to our economy “to this extent” when a bank goes bust in Europe!!??

As always happened in the past, such doubtful timings of announcements have done more bad than good for anyone.

Coming to today’s Markets, expect the Markets to open on a mildly positive note and look for directions. It is likely that we see respite from yesterday’s violent behaviour and see some recovery.

The Markets have closed at a very critical juncture and the levels of 4720 -4740 have now acted THRICE as Triple Bottom Support for the Markets and it is critically important to see that it trades above these levels. For today, the levels of 4825 and 4960 are likely to act as resistance the levels of 4740 and 4710 are likely to continue to act as major supports.

The RSI—Relative Strength Index on the Daily Chart is 37.8403 and it shows no failure swing. The Markets have made its new 14-day low whereas RSI has not and this is BULLISH DIVERGENCE.

All and all, it is important to note that the Markets, when faced with such external and few-entities-controlled circumstances, tends to defy technicals, but normally technicals do take over and it is best advised to sit through such circumstances. It is likely that we see some stability returning to the Markets. Though fresh purchases  or shorts may be avoided, it is strongly advised to maintain liquidity to hold on to positions. Cautiously positive outlook is advised for today.

Milan Vaishnav,

Consulting Technical Analyst,
www.MyMoneyPlant.co.in
 +91-9825016331
milanvaishnav@mymoneyplant.co.in
milanvaishnav@yahoo.com