Daily Market Trend Guide -- Tuesday, May 15, 2012

MARKET TREND FOR TODAY                                                         May 15, 2012

The three factors, Greek Crisis in the Eurozone, the Rupee continuing to slide and the inflation numbers continued to play spoil sport on the already OVERSOLD Markets as the Markets gave up its early session gains to end the day with moderate losses. The Markets opened positive and gave its intraday high of4957.50 in the early morning trade. After trading in a capped range, the Markets suddenly gave up its morning gains as it reacted to inflation numbers and the euro zone news flows as it went on to give the day’s low of 4874.50 in the late afternoon trade. It however, recovered a bit to finally end the day at 4907.50, posting a moderate loss of 21.10 points or 0.43%. It has continued to form a lower top and lower bottom on the Daily High Low Charts.

Today’s analysis would be more or less similar as the Markets can open moderately lower and improve as the session progresses and we may see the OVERSOLD technicals of the Markets resisting any major downside.

For today, the levels of 4975 and 5025 are immediate resistance and the levels of 4865 and 4810 are immediate supports on the Charts.

The lead indicators of the Markets continue to remain OVERSOLD. The RSI—Relative Strength Index on the Daily Chart is 27.8201 and though it has reached its lowest value in last 14-days continues to remain in OVERSOLD territory. It does not show any negative divergence. The Daily MACD continues to remain below its signal line.

It is important to note that the NIFTY futures have added 5.50 lakh shares in Open Interest and now has one of the highest Open Interest and positions on the short side. Secondly more important to note, statistically is that the FIIs have remained net  buyers in the Cash Segment yesterday to the tune of over Rs. 300 crores and have been net sellers to the similar amount in NIFTY futures, indication further addition of Open Interest and thereby the short positions.

It is important to note that the technicals are playing the part by resisting any major downside and the Markets now remain heavily OVERSOLD. There are chances of a pullback rally that can be seen even if the Markets continue to remain in the overall downtrend. It is important to note that a pullback rally now is overdue.

All and all, we reiterate our advice to retail investors to stay away from any heavy positions on either side and specifically avoid fresh shorts. Profits may be protected and selective purchases may be made. Overall, positive caution is advised for the day.

 Milan Vaishnav,
Consulting Technical Analyst,
www.MyMoneyPlant.co.in
http://milan-vaishnav.blogspot.com
+91-98250-16331 

milanvaishnav@mymoneyplant.co.in

milanvaishnav@yahoo.com