MARKET TREND FOR TODAY  -- November 07, 2012

The Markets spent the entire session yesterday in directionless trajectory but perked up in the final hour of the trade to end the day with moderate gains. The Markets opened on a mildly positive note and continued to trade with capped gains in the first half of the session. The afternoon trade saw some pressure creeping in as the Markets slipped into the red to give the day's low of 5693.65.  However, the final hour of the trade saw some short covering as the Markets recovered from its day's lows. It not only went into the green but went on to give the day's high of 5730.80. It finally ended the day at 5724.40, posting a moderate gain of 20.20 points or 0.35% while forming a moderately higher top and higher bottom on the Daily High Low Charts.
For today, expect a flat opening in the Markets. The global markets have been flat and are likely to react either way to the US Election outcomes and so with no domestic triggers in the Markets, we are also likely to see a range bound trade in our Markets. MORE IMPORTANTLY, technically speaking, the Markets have resisted to the levels of 5730 which remains critical resistance levels followed by 5800. For the up move to continue, the Markets will have to move past this levels of 5730-5750.

The levels of 5730 and 5815 shall act as immediate resistance for the Markets and the supports come it at 5630 levels.

The lead indicator point towards potential weakness in the short term. The RSI--Relative Strength Index on the Daily Chart is 58.6637 and it shows no failure swings. But, NIFTY has set a new 14-day high but RSI has not and this is  BEARISH DIVERGENCE.

On the other hand, the NIFTY has went on to add some open interest showing some buying in the derivatives.

Having said this, there are mixed indications on the Charts with lead indicators suggesting potential weakness in the short term and the F&O data suggests some resistance on the downside. All this is likely to keep the Markets in a range and bit volatile with a slight bias on the downside.

All and all, the Markets are likely to remain in a range and a bit of volatility may remain ingrained in it. It is advised to keep protecting profits on either side and keep taking fresh positions on highly selective basis as there is no directional trend until the Markets moves past the levels of 5730-5740 and sustains above that. Overall, continuation of cautious outlook is advised for today.
 
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331