MARKET TREND FOR
TODAY
August 16, 2012
The Markets had a good second half of the session as it
reacted to lower than expected inflation and ended the second day with modest
gains. Though what the Markets overlooked on Tuesday was the decline in exports
and the widening of the deficit. The Markets opened on a quiet note as expected
and briefly dipped into the red giving its intraday low of 5328.80. However,
after the announcements of the inflation numbers, the Markets saw some short
covering lead by banks and interest rate sensitives as it not only recouped its
minor losses but went on to give the day’s high of 5387.05. It hovered around
those levels until the end of the session and finally ended the day at 5380.35,
posting yet another modest gain of 32.45 points or 0.61%. The Markets have
formed a higher top and higher bottom on the Daily High Low Charts.
Today, we may see a flat to mildly negative opening as the
current mild positive global cues are likely to get offset as the global
markets were weak yesterday and we had a holiday here. We are likely to see a
flat to mildly negative opening and the consolidation after the Tuesday’s rise
is likely to continue as the Markets are yet to move past their major
resistance levels.
The levels of 5400 are likely to continue to act as major
resistance as indicated by the red trend line on the Charts.
The RSI—Relative Strength
Index on the Daily Chart is 66.1755 and it has reached its highest value in
last 14-days. Though it does not show any negative or positive divergence. The
Daily MACD continue to trade above its signal line.
The NIFTY and Stock futures have continued to add in Open
Interest overall and the NIFTY PCR has inched up to 1.22.
Having said this, there are two important factors to be kept
in mind. First, the Markets are yet to move out of the resistance zone of
5377-5405. So, they are likely to continue to resist around these levels, even
if we see positive trade initially. Secondly, on the fundamental side, though
the inflation numbers have been lower than expected, the trade deficit has been
at its all time low with the exports falling by 14.8%. This is likely to
contribute to the current technical formation on the Charts.
All and all, it is advised not to get carried away by the
Tuesday’s up move and no aggressive longs should be built until the Markets
moves past its key resistance levels. Consolidation and bouts of profit booking
would be continued to be seen, making the Markets either range bound or bit
volatile. High degree of selective approach is advised with cautious outlook
today.
Milan
Vaishnav,
Consulting
Technical Analyst,
+91-98250-16331
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