Wednesday, March 7, 2012

Daly Market Trend Guide -- Wednesday, March 07, 2012

MARKET TREND FOR TODAY                                                        March 7, 2012
The Markets saw wild swings yesterday on back of UP elections outcome as it swung nearly 175-odd points both sides to ultimately end the day lower. The Markets opened  weak as expected and grew weaker in the initial trade. However, it saw a very sharp and violent upside as the Markets expected SP would need Congress to form government in UP. On this expectation, the Markets went on to give its intraday high of 5382.05. However, with the things clarifying and the SP needing no help from congress saw the Markets paring all of its gains. It came of from its highs and gave its intraday low of 5206.40, as it came off 175-odd points from its day’s high. It finally ended the day at 5222.40, posting a net loss of 57.95 points or 1.10%. In the process, it has formed a higher top but lower bottom on the Daily High Low Charts.
 For today, expect the weakness in the Markets to continue, at least in the initial trade. The Markets are expected to open on a lower note and trade negative in the initial session. Today, its intraday trajectory would be critical to decide the trend for the day.

The election outcome in the UP has been perceived negative by the Markets as this translates, as per Markets, into weaker  Congress at the Centre, continuation of policy paralysis, fears of populist budget, etc.  On the Global front too, the US Markets ended lower and the Europe too ended very weak yesterday. 

However, a look on the technicals is also very important. The Markets continue to remain weak on the Charts, but very important support for the Markets exists at the levels of its 200-DMA, i.e. at 5165 and 5139 which is its 100-DMA. So, the weakness is likely to continue but the Markets may find support in the next 1-1.5% of its range.

The RSI—Relative Strength Index on the Daily Charts is 42.9854 and it has reached its lowest value in last 14-days, which is Bearish. The Daily MACD continues to trade below its signal line and is Bearish.
NIFTY Futures have added 25 lakh shares in Open Interest and the Stock Futures shed 69 lakh shares in Open Interest which indicates that while unwinding of stocks futures took place, some hedge is also created by fresh creation of Shorts in the NIFTY Futures.

Having said this, weaker opening expected, but now we advice to refrain from aggressive shorting in the Markets as Markets near two of their major support in the 1-1.5% range. Very selective purchases may be made. Stock specific activities may continue to be seen. Volatility too cannot be ruled out. So, until next week, aggressive positions in the Markets on the either side should be avoided. Overall, cautious approach is advised in the Markets.

Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331


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