MARKET REPORT January
31, 2014
The Markets had a terrible session yesterday as it opened
weak on similar global cues, reeled under rollover pressure and global
developments and ended the day with losses after seeing some short covering
from the lower levels. The Markets opened with a gap down opening, however this
gap was much less than what SGX suggested. However, the Markets remained under
pressure and in downward falling trajectory and kept losing ground steadily. In
the last hour of the trade, the Markets went on to see the low of 6027.25.
However, the Markets saw a very sharp spurt in the last half an hour of the
trade. The Markets saw itself recovering over 50-odd points mostly on account
of short covering. It finally ended the day at 6073.70, still with a net loss
of 46.55 points or 0.76% while forming a sharply lower top and lower bottom on
the Daily High Low Charts.
MARKET TREND FOR TODAY
Today, expect a flat opening in the Markets, and at least in
the initial trade, we can hope to see some respite from the weakness that we
have been witnessing over last week. The
Markets have breached its 100-DMA at close levels and these levels will act as
resistance on its way up. This will see the Markets consolidating before
attempting a sustainable up move. Given the lead indicators, the downside
remains limited.
Today, the levels of 6110 and 6140 would act as immediate
resistance on the Daily Charts whereas, the levels of 6025 and 6000 are likely
to act as supports.
The RSI—Relative Strength Index on the Daily Chart is
35.5210 and it has reached its lowest value in last 14-days which is bearish.
However, today as well, 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 added
over 17.49 lakh shares or 12.32% shares in Open Interest. The F&O data
continue to show that significant amount of shorts still exist in the system.
Given the pattern analysis of the Chart, the NIFTY has
breached its 100-DMA at the Close levels. Technically speaking, this is a
bearish formation and has given a sell signal. However, the reading still
remains on similar lines that of yesterday t hat any weakness extending would
take the Markets near the “oversold” levels and therefore there are very high
chances that the Markets sees a sharp pullback. The main reason behind this is the data that
shows that the FIIs have been shorting heavily in the derivative segment while
selling in Cash segment.
All and all, while keeping the reading on the same lines
that of yesterday, we continue to advice from taking any fresh short positions.
We also continue to advice also not to make aggressive purchases as well but to
continue to maintain adequate liquidity for positions. Very selective purchases
may be made as the downside in the Markets remains grossly limited.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
