MARKET TREND FOR TODAY March 16, 2012
The Markets spent yesterday’s session with great cautionary stand before the Budget and despite favourable technicals, drifted lower in the entire session to end the day with loses. The Markets opened negative and remained negative in a downward falling trajectory for the entire session. It kept drifting lower during entire day and went on to give intraday low of 5362.30. It ended the day at 5380.50 after recovering a bit but still posted a loss of 83.40 points or 1.53%. The Markets reacted negatively after the RBI did not cut rates but that was anyway expected. In the process, it has formed a lower top and lower bottom on the Daily High Low charts.
For today, expect the Markets to open on a positive note and look for directions. The levels of 5450 and 5490 shall act as immediate resistance today and the levels of 5350 and 5320 shall act as supports.
The RSI—Relative Strength Index on the Daily Chart is 53.4057 and it is neutral as it shows no negative divergence or failure swings. The Daily MACD continues to trade below its signal line, again remaining on the verge of giving a positive crossover.
The Markets will react today in a manner typical on the Budget day. Yesterday, the Markets have come down despite favourable technical. There was a positive swing on the lead indicator and a positive crossover of the short term averages which is a bullish sign for the Markets. But the Markets reacted after the RBI not cutting rates. But it is important to note that the RBI Accouchements were actually a non-event as it was anyway expected that post the CRR cut of 75 BPS, the rates won’t be slashed further. Thus, the Markets had no reason to react in the manner it did yesterday.
Having said this, for today, the Markets shall open moderately positive but trade in a range until the Budget speech starts. Then it will start reacting to the announcements. The session will remain certainly volatile but any reactions would again typically remain knee-jerk reactions and actually market reaction shall start coming in from next week. However, if nothing significantly negative comes out, the bias remains on the upside.
Also, yesterday’s fall has come while adding significant Open Interest in NIFTY and other stocks which implies creation of shorts in the system. Thus, there are all chances that we see stability in the Markets coming in once the knee-jerk reactions are over. So even if the Markets have momentarily dipped little below its important supports, it is likely to move past them again.
All and all, volatile session ahead, but unless anything significantly negative comes in the Budget, the bias remain with the uptrend remaining intact. However, it is advised to refrain from aggressive positions until the fine prints of the Budget gets clear. Overall, cautiously positive approach is advised for today.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
