MARKET REPORT
June 17, 2013
Markets saw a very strong pullback on Friday as it opened on
a positive and strong note following oversold technicals and conducive global
markets and remained positive throughout the session while closing with robust
gains. The Markets opened positive and remained in upward rising trajectory
throughout the session gradually drifting upwards. In the mid session after the
spurt, the Markets briefly resisted to its 200-DMA and moved in sideways
trajectory. However, it moved past that level as well as it went on to give the
day’s high of 5819.40 in the last hour of the trade. The Markets came off a bit
form those levels and finally ended the day at 5808.40, posting a robust gain
of 109.30 points or 1.92% while forming a sharply higher top and higher bottom on
the Daily High Low Charts.
Technically speaking, since the Markets have ended the day
near the high point of the day, it is likely to open positive and continue with
the up move, at least in the initial session. However, expect the Markets to
open flat and look for directions. The Markets have ended a notch above its
200-DMA which is 5800.20 and it would be very necessary and important for the
Markets to maintain the levels above this in order to avoid and weakness creeping
in. The Markets shall react to the RBI Monetary policy announcements that come
later today.
For today, the levels
of 5845 and 5870 are likely to act as immediate resistance levels on the Charts
and the supports come in lower at 5800, 5765 and 5740 levels.
The lead indicators remain neutral to mildly bullish.
The RSI—Relative Strength Index on the Daily Chart is 41.0187 and it has just
moved out from its oversold territory, which is a bullish indicator. However,
otherwise it remains neutral as it shows no failure swings or any bullish or
bearish divergence.
The Daily MACD continues to remain bearish as it trades below its signal line. On
the Candles, A rising window occurred (where the top of the previous shadow is
below the bottom of the current shadow).
This usually implies a continuation of a bullish trend. There have been 3 rising windows in
the last 50 candles--this makes the current rising window even more
bullish.On the Weekly Charts, RSI remains neutral at 48.8819 and
Weekly MACD has reported a negative crossover as it now trades below its signal
line.
On the derivative front, NIFTY June Futures have shed
1.57 lakh shares or 1% in Open Interest. This signifies that the strong
pullback that we witnessed on Friday was also because of some short covering.
It would be critical to see this being
replaced with fresh longs today in order to prevent this from being a dead cat
bounce.
Overall, there are contradictory signals in Daily and
Weekly Charts. While the Daily Charts have shown pullback from oversold levels,
the weekly charts suggest a new weakness in Weekly MACD which may make the
Markets weak in the immediate short term later in the week. However, on the
other side, the derivative data show no heavy short covering. Importantly, the
Markets have closed a notch above its 200-DMA which would be a critical levels
to maintain at any given point of time. Further to this, RBI shall come out
with Monetary Policy review. The Markets do not expect any rate cuts this time
due to heavy devaluation of Rupee and the inflation numbers not showing any favour.
However, any cut would be a great positive surprise and if they remain
unchanged, may see a minor knee jerk reaction.
All and all, the Market are likely to remain in a
range and also remain volatile. The levels of 5800.20—200DMA shall be important
to be observed. The Markets will have to remain above this as much as it can in
order to avoid any weakness. It is advised to remain very selective and light
in creating new positions on either side and vigilantly keep protecting profits
wherever possible. Overall cautious outlook ahead is advised for today.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
