Tuesday, June 19, 2012

Daily Market Trend Guide -- Tuesday, June 19, 2012

MARKET TREND FOR TODAY                                              June 19, 2012
A step taken to keep the Repo Rate and CRR unchanged – which is economically very much correct did not went well with the Markets which was unanimously expecting cuts, as it ended the day with deep losses coming of violently from its opening highs. The Markets opened positive and remained buoyant as it gave it’s intraday high of 5199.68. This was against the high of 5200 mentioned by us. It moved in that range until the RBI made announcement. It came off violently from there and went on to give low of 5041.70, coming off more than 150 points from the day’s high. It ended the day at 5064.25, posting a cut of 74.80 points after coming off from its lows or 1.46%. It formed a higher top and higher bottom on the Daily High Low Charts.

Today would be equally important session for the Markets. The Markets have maintained the support of its 200-DMA at close levels. With moderately positive opening today, it would be critically important for the Markets to maintain the levels above of its 200-DMA, at least at close which is 5072.71 in order to avoid any further weakness from creeping in. The intraday trajectory, would therefore, remain very much important.

For today, the levels of 5130 and 5200 ar the immediate resistance on the Charts and the levels of 5072 and 5020 are immediate supports at Close levels.

The lead indicators continue to remain in place with RSI—Relative Strength Index on the Daily Chart at 53.2949 which is neutral as it shows no negative divergence or a failure swing. The Daily MACD still continues to remain bullish as it trades above its signal line.

Having said this, it is important to note that both NIFTY and Stock Futures have added in Net Open Interest indicating creation of short positions in the Markets. The NIFTY PCR stands at 1.43 as against 1.55.

Further to this, it is also important to note that we remained dominated with the RBI event yesterday and remained underperformer among the Asian Markets. Given this, we  are likely to see some decoupling today and we are likely to see some stability returning to the Markets.

Also important to note is that RBI has taken a economically-correct step and this is definitely likely to arrest the fall in the markets after a short term knee-jerk reaction. The opportunity should be used to take selective long positions and shorts should be strictly avoided. Markets are still in broad range and there is no negative breach on the Charts as of now. Cautious and mildly positive approach is advised for today.

Milan Vaishnav,
Consulting Technical Analyst,

Monday, June 18, 2012

Daily Market Trend Guide -- Monday, June 18, 2012

MARKET TREND FOR TODAY                                                               June 18, 2012
After a positive opening and a range bound trade in the morning session, the Markets had a buoyant session as it ended the day with decent gains. The Markets opened on a positive note and traded with capped gains in the morning session. However, after that, it transformed itself into rising upward moving trajectory and remained so for the entire session. It went to give the day’s high of 5146.20 towards the end of the session. It finally ended the day at 5139.05, posting a decent gain of 84.30 or 1.67%. It has formed slightly higher top and bottom on the Daily High Low Charts and the volumes remained moderately above average. With this, the Markets have ended the week with net gains of 70.70 points or 1.42%.

Today’s session remain highly important for the Markets as the Markets will deals with contradictory technical signals and the positive news flows. It is also set to react to the Monetary Policy that RBI is set to announce later today.

The Markets are set for a positive and buoyant opening today following positive news flow from Eurozone. At the same time, the opening will cause the Markets to open around its 50-DMA and the behavior of the Markets stands critical around those levels. Further, with the RBI policy due today, the Markets shall also react to that and thus given the technical chances of some weakness creeping in later today, the session remain critically important. The levels of 5200-5220 shall act as immediate resistance today.

The RSI—Relative Strength Index on the Daily Chart is 60.2573  and it shows no failure swing. However, the NIFTY has reached its highest value in last 14-days whereas RSI has not and this is BEARISH DIVERGENCE. The Daily MACD continue to trade above its signal line. On the Weekly Chart, the RSI stands neutral at 50.7644. Weekly MACD trades below its signal line. 

Having said this, if we look purely at the technical charts, not counting any other external positive news flow, then the Markets has theoretical chances of weakening a bit as the day progresses and some minor profit booking may be seen. However, we will see positive Europe opening likely to aid this and possible the Markets may react to the RBI Announcements before that.  There are chances that the Markets reacts after RBI Announcements but in that case, we will have more technicals reasons for that. So, with this largely contradictory reading, the volatility is something that will remain ingrained in the Markets today.

All and all, given this reading, it is thoroughly advised to remain extremely cautious for today.  The Markets shall remain volatile and aggressive position should be avoided and highly selective approach should be taken. Profits should be protected at higher levels. The undercurrent, however remains intact but profit taking bouts cannot be ruled out. Cautious optimism is advised for today.

Milan Vaishnav,
Consulting Technical Analyst,