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Thursday, December 20, 2012

Daily Market Trend Guide -- Thursday, December 20, 2012

MARKET TREND FOR TODAY December 20, 2012

The Markets continued to inch up further as it ended the day with modest gains but spent the entire session in a tight and capped range. The Markets opened positive and gave its intraday high of 5939.40 in the early minutes of the trade. Thereafter, it spent the entire session in a very narrow trading range and remained in sideward trajectory for the entire session. It kept gaining and losing ground in between. It continued to do so until the end of the session and finally managed to end the day at 5929.60, posting a modest gain of 32.80 points or 0.56%. The Markets have formed a higher top and higher bottom on the Daily High Low Charts.

Today’s behavior of the Markets would be critically important for the Markets. The Markets are expected to open on a flat to mildly positive note and look for directions. The opening levels, if positive would be around the upper resistance levels of 5950-5960 and the behaviour of the Markets vis-à-vis these levels would be critically important to see if they give a upward breakout or not.

For today, the levels of 5950-5960 would be important resistance levels and supports come in much lower at 5860 and 5810 levels.

The lead indicators have turned from neutral to mildly bullish. The RSI—Relative Strength Index on the Daily Chart is 66.5258 and it is neutral as it shows no bearish or bullish divergences and also it does not show any failure swings. The Daily MACD has again turned positive as it now trades above its signal line while is bullish.

On the Derivative front, the NIFTY Futures have shed over 2.64 lakh shares or 1.22% in Open Interest which is not a good sign. The NIFTY PCR stands at 1.07.

Having said this, from the above reading, there are clear contradiction from the lead indicators which are neutral to mildly bullish and in the Derivative data which show some long unwinding and short covering in the Markets.

It is also important to note that the Markets have not achieved a complete breakout and its behaviour around the critical resistance levels of 5950-5960 would be critically important to watch for. A comprehensive breakout is required for a sustainable fresh up move to begin and sustain. With the contradictory signals on the lead indicators and the derivative data, it is likely that the Markets still remains volatile and in a range.

All and all, it is advised to continue with a selective and cautious approach in the Markets. While remaining very vigilant and protecting profits on either side, fresh positions should be taken on very selective basis. With the bias remaining neutral to positive, aggressive stance in the Markets should be avoided until clear breakout is achieved.

Milan Vaishnav,

Consulting Technical Analyst,

+91-98250-16331

Wednesday, December 19, 2012

Daily Market Trend Guide -- Wednesday, December 19, 2012

MARKET TREND FOR TODAY December 19, 2012

The Markets had an utterly volatile session yesterday wherein in opened on a flat to mildly positive note but reacted negatively as it touched its day’s low of 5823.15 to the RBI Rate announcements wherein the rates were kept unchanged. However, in the second half, it saw equally sharp short covering as it reacted to the passing of the Banking Amendment b ill in the Loksabha. It went on to move back into the positive territory and give the intraday high of 5905.80. However, the Markets continued to remain in the broad trading range that they are in and ended the day at 5896.80 while forming a higher top and lower bottom on the Daily High Low Charts.

For today, again expect a moderately positive opening for the Markets and the Markets shall look for directions heavily depending upon the intraday trajectory that it forms post opening. Though the Markets have ended the day near the high point of the day, they are still very much within the broad range that they have been trading in.

For today, since the Markets are still in the broad range that they have been trading in, the levels of 5920 and 5950 shall continue to act as immediate resistance. The supports come in at 5820 and 5775 levels.

The RSI—Relative Strength Index on the Daily Chart is 63.4435 and is neutral and it shows no bearish / bullish divergence or failure swings. The Daily MACD continues to remain bearish as it trades below its signal line.

Having said this, on the Derivative front, NIFTY futures have shed in total Open Interest. The NIFTY PCR stands at 1.07 as against 1.05.

Again, as we have been repeatedly mentioning in our previous editions of Daily Market Trend Guide, the Markets are still within the broad trading range. It will have to move past the levels of 5950 to have a sustainable rally and a positive breakout. Until this happens, it shall continue to trade in this manner in a broad range with volatility ingrained in it.

Yesterday, what we saw was a knee jerk reaction to both the RBI Rate announcements which kept the Repo, Reverse Repo and CRR unchanged and the passing of the Banking Amendment Bill. Both of these reaction were quite knee jerk and it overall affected a sectoral out performance. The broader Markets still continue to remain in a overall range.

All and all, since the Markets continue to remain in similar range, the analysis too remains almost similar. While avoiding aggressive positions and protecting profits on either side, selective buys can be made while maintaining a positively cautious outlook on the Markets.

Milan Vaishnav,

Consulting Technical Analyst,

+91-98250-16331

Tuesday, December 18, 2012

Daily Market Trend Guide -- Tuesday, December 18, 2012

MARKET TREND FOR TODAY December 18, 2012

The Markets had an disappointing session yesterday as it spent the entire session in a falling channel and finally ended the day with modest losses. The Markets opened on a flat to mildly positive note and gave its intraday high of 5856.05 in the early minutes of the trade. However, immediately thereafter, the Markets transformed itself into falling trajectory and remained liked that for the rest of the session. The Markets kept losing ground gradually and went on to give the day’s low of 5850.15. It neve saw any recovery towards the end and it finally ended the day at 5857.90, posting a modest loss of 21.70 points or 0.37% while forming almost a parallel bar with slightly higher bottom on the Daily High Low Charts.

Today is again expected to be no different. The Markets are expected to open on a flat to mildly negative note and look for directions. However, today, RBI is coming up with monetary policy and the Markets would react to its Rate Announcements wherein 25bps is widely expected. Apart from this, overall, the Markets continues to remain in corrective mood.

For today, the levels of 5900 and 5950 continue to act as immediate resistance on charts. Supports come in at 5820 and 5775 levels.

All lead indicators continue to point towards continuing weakness in the Markets. The RSI—Relative Strength Index on the Daily Chart is 59.3183 and it has reached its lowest value in last 14-days, which is bearish. Also, RSI has set a new 14-period low where as NIFTY has not yet, and this is “Bearish Divergence”. The Daily MACD too has reported a negative crossover as it now trades below its signal line, which is a bearish sign.

On the derivative front, NIFTY Futures have continue to shed nominal open interest by 35,000 shares of nominal 0.16%. NIFTY PCR stands at 1.04 as against 1.06.

Again, as we have been mentioning in our previous edition of Daily Market Trend Guide, no serious up move is expected until the Markets move past the levels of 5950. Until this happens, it is bound to trade in a range and thus some amount of volatility shall remain ingrained in it. Today, the Markets are also set to give knee jerk reactions to RBI Announcements later in the day. Barring this, it is likely to remaining in overall corrective mode.

All and all, continuation of cautious outlook is advised. The Markets shall react positively to rate cuts, if any, otherwise broader markets continue to remain in corrective mood. While avoiding aggressive positions, selective approach should be continued while protecting profits on either side vigilantly.

Milan Vaishnav,

Consulting Technical Analyst,

+91-98250-16331