MARKET TREND FOR TODAY
May 7, 2012
The Markets had a very disappointing end to the Week as the rising Rupee, uncertainty on the GAAR
issues, some unfavorable cues from Europe caused the Markets to end the day
with good amount of cut. The Markets opened negative and after remaining in
capped range for half of the session, saw the cut getting deeper, although on
very low volumes and went on to give the day’s low of 5070.60. It finally ended
the day at 5086.85, posting a net loss of 101.55 points or 1.96%. It formed a
lower top and lower bottom on the Daily High Low Charts and with this, the
Markets have ended the week with net loss of 122.15 points or 2.35%.
Today’s session remain critically important for the Markets
. The Markets shall be affected by more number of non-technical factors than
technical factors and the contradiction between the two continues to exist. The
F&O statistics very clearly show the potential of bottoming out in the very
immediate term whereas some non-technical factors point towards volatility to
continue.
Expect the Markets to open on a lower note and look for
directions and the intraday trajectory would continue to be critically
important. The levels of 5117 and 5170 shall act as resistance and the levels
of 5050 and 5020 shall act as support.
The RSI—Relative Strength Index on the Daily Chart is
36.5158 and it has reached its lowest value in last 14-days which is bearish
but it does not show any negative divergence. The Daily MACD continues to
remain below its signal line. The similar pattern appears on the Weekly Charts.
Having said this, there are very few important points
that needs to be noted. As against the outflow of over 1200 Crores by the
FIIs in the last month, this month of May has seen net purchases to the tune of
876 Crores by the FIIs despite the fall. Further, the NIFTY has ended the day
with addition in open interest. The third, but most important point is that the
Markets are still within the support filters of its important support and there
are ALL chances that this is maintained at the Close levels. Further to this,
with the Finance Bill going into discussion in Parliament today, the
clarifications that are expected from the FM are important as most of the
negatives are factored in the pricing. Also, the crude trades at its 4-month
lows and this is certainly a good macro indicator.
GOING B Y THE ABOVE, over and above the technical
factors that the Markets have attempted to give a downward breakout, it is
important that we take the above factors into consideration also. There are all
chances that we see a gap down opening today, but recover from the opening lows
ahead in the session and the Markets stays in its support filters. It is very
clearly advised and strongly reiterated that retail investors should AVOID
shorts and aggressive positions in the Markets while maintaining liquidity as
Markets are governed by non-technical factors. The existing positions should
patiently be held on to and once some intermediate bottoms are seen, some
selective purchases may be made. Until that happens, the existing positions may
patiently be held on to and liquidity should be maintained. We again reiterate
that shorts should be avoided. Overall cautious outlook is advised for today.
Milan
Vaishnav,
Consulting
Technical Analyst,
+91-98250-16331
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