MARKET TREND FOR TODAY January 25, 2012
The Markets gave a thumbs-up reaction to the 50-basis points CRR Cut by the RBI wherein it was expected to keep it unchanged. The Markets opened positive , and spent the initial session in a very capped and narrow range. However, post the CRR Cut, the Markets saw a sharp spurt led by banking and auto stocks and it went on to give its day’s high of 5141.05. It moved sidewards in a range in the last hour of the trade. It came off a bit and ended the day at 5127.35, still posting a decent gain of 81.10 points or 1.61%. In the process, it has formed a sharply higher top and bottom on the Daily High Low Charts.
For today, technically speaking, the Markets are expected to open on a positive note and continue with its up move, at least in the initial trade.
Thus, for today, we can again expect a positive opening and then the Markets are expected to look for directions, today, the intraday trajectory playing a very important role in deciding the trend for today. For today, the levels of 5160 and 5205 shall act as resistance and the levels of 5090 and 5040 are immediate supports.
Having said this, there are three important points to note here. First of all, with yesterday’s rise, the Markets are now OVERBOUGHT. The RSI—Relative Strength Index on the Daily Chart is 72.36 which is in OVERBOUGHT range. Secondly, at current levels, the Markets are near a long term falling trend line drawn from its life time high levels of 6388, joining 6178, 5700 and 5200. This is also likely to pose resistance. Thirdly, the Markets have its 200-DMA of 5212 which will certainly cap the upside from thereon.
Thus, from the above reading, it can again be fairly concluded that the upside from the current levels would be fairly limited as we have two important resistance at current levels and another one little on the upside. Further more, today is the expiry day (tomorrow being a holiday) and thus we will also see the session remaining dominated with rollover centric activities.
Having said all this, it is very much likely that we see positive opening today. However, after the positive opening and trade in the initial session, there are chances that the Markets are consolidates or comes of a bit on account of profit taking. It is thus advised to refrain from taking any aggressive long positions in the Markets while vigilantly protecting profits at higher levels. Overall, cautious outlook is advised for today.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
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