Wednesday, April 17, 2013

Daily Market Trend Guide -- Wednesday, April 17, 2013

MARKET TREND FOR TODAY                                                                       April 17, 2013
The Markets staged a very strong pullback yesterday as it opened mildly on a negative note but remained in rising channel throughout the session and ended the day with robust gains. The Markets opened on a mildly negative note and gave its intraday low of 5555.85 in very early seconds of the trade. However, it immediately came into the positive territory and remained in upward rising channel throughout the session. It gradually kept making new intraday highs while it gained further strength in the second half of the session. It went on to give the day’s high of 5699.25. It finally ended the day near that point at 5688.95, posting a robust gain of 120.55 points or 2.16% forming a sharply higher top and higher bottom on the Daily High Low charts.


Today would be very important and critical session for the Markets. The Markets have moved past its 200-DMA, which is 5656.56 today and has closed above it. Further to this, since the Markets have ended the day yesterday near its high point, technically speaking, they are expected to continue with its up move, at least in the initial trade. The Markets are expected to open on a mildly positive note and trade positive and the levels of 200-DMA are expected to act as support in case of any minor profit taking or consolidation.

For today, the levels of 5710 and 5745 shall act as resistance and the levels of 5650 shall act as major support for today.

The lead indicators point towards continuing strength in the Markets. The RSI—Relative Strength Index on the Daily Charts is 51.0295 and it has reached its highest value in last 14-days, which is bullish. Also, RSI has set a new 14-day high whereas NIFTY has not yet, and this is Bullish Divergence. Also, the Daily MACD has reported a positive crossover.  It now trades above its signal line and is bullish.

On the derivative front, however, NIFTY has shed over 16.30 lakh shares or 7.61% in Open Interest. This indicates that yesterday’s up move can be on account of massive short covering of the shorts positions there were seen continuously being  created over last couple of sessions. The key point would be to see if these short positions get replaced by fresh longs.

All and all, given the derivative data, there are mild chances that we see some consolidation or minor profit taking after initial positive charts. There are also equal chances that the Markets continue with its up move as the short covering gets replaced by fresh longs. However, sectoral out performance would continue. Overall, rather than continuing fresh purchases, more concentration should now be laid on protection of profits wherever possible while maintaining a positive but cautious bias on the Markets.

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


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