MARKET TREND FOR TODAY
April 22, 2013
The Markets saw continuation of sustained pullback on back
of heavy short covering as the Markets opened on positive note and ended the
day with robust gains as it remain strong throughout the session. After opening
on a positive note the Markets remained in a capped range moving sidewards in
the entire morning session. However, in the second half of the session, it saw
further strength coming in as it furthered its gains. It went on to give the
day’s high of 5794.35 in the late afternoon trade. It hovered around those
levels for a while and finally managed to end the day near the high point of
the day as it maintained its levels. It ended the day at 5783.10, posting a
robust gain of 94.40 points or 1.66% while forming a sharply higher top and
slightly higher bottom on the Daily High Low Charts.
Today, technically speaking, since the Markets have ended
the day near its high point, it is likely to open on a positive note and
continue with its up move, at least in the initial trade. Expect the Markets to
open on a moderately positive note and look for directions. The Markets have
pulled back nearly 300-points and whiled doing so have shed open interest
regularly.
For today, the levels of 5810 and 5835 shall act as immediate
resistance on the Charts and the levels of 5740 and 5710 are immediate
supports.
The lead indicators point towards continuation of up move, at least in the
initial trade. The RSI—Relative Strength Index on the Daily Charts is 57.8103
and it has reached its highest value in last 14-days which is bullish. It does
not show any bullish or bearish divergence. The Daily MACD is bullish as it
trades above its signal line.
On the derivative front, the NIFTY futures have continued to
shed Open Interest by over 14-19 lakh shares or 7.47% indicating strong short
covering. These short covering has occurred
as the Markets had added massive open interest on its way down.
Having said this, as mentioned earlier, the Markets have
pulled back nearly 300-odd points and while doing so has shed open interest
significantly. This clearly indicates that the pullback is on account of short
covering and not on fresh buying. It requires to be very keenly observed to see
if this short covering is replaced by fresh buying in order to sustain and
continue with the current ongoing up move.
All and all, there are chances that the Markets can open on
a moderately positive note but at the same time, there are equal chances that
we may see some minor profit taking later today or in coming session. The
possibility of the Markets consolidating or seeing some minor profit taking
just cannot be ruled out given the technical and derivative data reading.
Keeping this in view it is advised to approach the Markets with cautious
outlook until some consolidation happens.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
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