Tuesday, February 5, 2013

Daily Market Trend Guide -- Tuesday, February 05, 2013

MARKET TREND FOR TODAY                                                                  February 05, 2013
Yesterday remained a thoroughly disappointing session for the Markets as it opened and a buoyant note, traded buoyant in the initial trade then  pared all of its gains to end the day with modest losses. The Markets opened positive and strong and it made its day’s high of 6038.50 in the morning session of the trade. The Markets traded sideways in the first hour and half of trade in a range bound trade but the second half of the trade saw the Markets transforming themselves once again into falling trajectory. The Markets came off its highs, pared its gains to dip into the negative and gave day’s low of 5981.25. It finally ended the day at 5987.25 posting a modest loss of 11.65 points or 0.19% forming a lower top and lower bottom on the Daily High Low Charts. The cut on the close charts has not been deep but Markets came off nearly 60-odd points from day’s high.

Today, we are likely to see a weaker opening in the Markets on back of weak global markets. The Markets are expected to open on a weak  and negative note and look for directions. However, the cut is not likely to be as big as other Asian peers as we have already come off much from yesterday’s intraday high post weakness in the European Markets.

For today, the levels of 5940 shall act as a important support levels to watch for.

The RSI—Relative Strength Index on the Daily Chart is 48.1936 and it has reached its lowest value in last 14-days which is bearish. However, it does not show any bullish or bearish divergence. The Daily MACD continues to remain bearish as it trades below its signal line. 

Having said this, the derivative statistics paid slightly positive picture. The NIFTY February futures have added over 5.96 lakh shares or 4.74% in Open Interest. This trend has been witnessed also across all key stocks. This very clearly signifies that there has been huge shorts created in the system.

Having said this, as mentioned earlier, we have came off over 60-odd points from yesterday’s intraday high. With today’s weaker opening likely, the cut is not expected to be as big as other Asian Markets. Further to this, the levels of 5940 are likely to act as major support levels. At this point, the supports also exists in form of 50-DMA at close 5940.63. 

All and all, even with the Markets testing these levels, there will be no breakdown on the Daily Charts. Further, with heavy shorts existing at current levels, if the Markets tests the levels of 5940, these would come in as another supports and we may not see the Markets giving a negative breakdown on Charts. Overall, while aggressive shorts should be avoided, any downside should be utilized to make very selective purchases. There are chances that we may see some improvement coming in after initial weakness. Cautious outlook with tinge of optimism is advised for today.

Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331


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