MARKET TREND FOR TODAY March 23, 2012
The Markets had a very disappointing session yesterday after it saw a very rapid selloff in the last hour and half of trade as the Markets went on to end the day with steep losses. The Markets opened moderately lower on expected lines but after briefly trading in the red, moved into positive territory and gave its intraday high of 5385.95. The Markets traded in a capped range after coming off from its highs, but in the last hour and half of trade, it saw a across the board sell-off as it saw a steep fall taking the Markets to intraday low of 5205.65. This was attributed to the coal scam (though CAG has denied the reports), weak PMI data and the rollback of rail fares once again bringing to the focus the Government’s inability to pursue any reforms and its weakness in handling its allies. All this contributed to the bad sentiment. The Markets ended the day at 5228.45, posting a deep cut of 136.50 points or 2.54%. The volumes remained high at 2.28 lakh crores and the Markets have formed a higher top but lower bottom on the Daily High Low charts.
For today, we can expect some stability to return in the Markets. Though the Markets came off in a rapid manner yesterday, it is still trading above one of its major supports, i.e. its 200-DMA. We can expect the Markets to open on a flat to moderately positive note and look for directions.
For today, the levels of 5290 and 5350 shall act as immediate resistance and the support is expected to come in at 5157 which is the 200-DMA of the Markets.
The RSI—Relative Strength Index on the Daily Charts is 44.0982 and is neutral as it shows no negative divergence or failure swings. The Daily MACD is bearish as it continues to trade below its signal line.
Having said this, it is important to note that there has been lot of panic element in the Markets yesterday but still, there has been no structural breach on the Charts. The Markets still can remain fairly in the broad trading band it has established for itself. Though some stability is expected, even if the Markets remain and get bit weaker, it is largely expected to take support near / at its 200-DMA which is is 1% range.
All and all, with no structural breach seen on the Charts, the downside in the Markets remain limited at these levels. Shorts should be refrained from and selective purchases can be made using this downside as an opportunity to enter in certain stocks. However, profits still needs to be vigilantly protected. Overall, cautious, but mildly positive approach is advised for today.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
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