MARKET TREND FOR TODAY
May 02, 2013
Yesterday was a volatile session for the Markets as the
Markets saw good amount of intraday swings before ending the day with modest
gains. The Markets opened on a strong and positive note and gave its intraday
high of 5962.30 in the very early seconds of the trade. However, after a brief
deliberation, the Markets started losing ground gradually and dipped into the
red. The Markets traded in the red until the late afternoon trade while it gave
its intraday low of 5867.80 as it came off over 95-odd points from its day's
high. However, the last hour and half of the trade saw some recovery as the
Markets went back into the green almost to the earlier levels. It hovered in
the positive territory and finally ended the day at 5930.20, posting a modest
gain of 26.10 points or 0.44% while forming a higher top and similar bottom on
the Daily High Low Charts.
Today, expect the Markets to open on a flat to modestly
negative note and look for directions. The Markets are witnessing consolidation
and are likely to face it today as well. The Markets trades near its pattern
resistance and therefore the volatility that we saw in the previous session is
likely to remain today as well.
For today, the levels of 5950 and 5972 are important
resistance levels for today. So far as supports are concerned, supports come in
at 5905 and 5860 levels.
The lead indicators show some signs of weariness as
RSI—Relative Strength Index on the Daily Chart is 64.7729 and it shows no failure
swings. However, NIFTY has given a new 14-period high but RSI has not and this
is Bearish Divergence. The Daily MACD continues to remain bullish as it trades
above its signal line. On the Candles, A doji star
occurred (where a doji gaps above or below the previous candle). This often signals a reversal with
confirmation occurring on the next bar.
On the derivative front, NIFTY has added over 3.65
lakh shares or 2.26% in Open Interest which shows some addition of long
positions. The NIFTY PCR stands at 1.08 as against 1.05.
Having said this, it is important to note that the
Markets trades near its pattern resistance levels being in 15-25 points range.
Given this as well as some moderate signs on lead indicators for some potential
weakness, it cannot be ruled out that the Markets may again see some minor
profit taking from higher levels, even if it opens and trades positive. With
the OI being added, this may also fuel some volatility in the Markets.
All and all, the Markets are likely to see some amount
of volatility and the possibilities of some more consolidation / minor
correction cannot be ruled out as it trades near its pattern resistance.
Further, it is also likely to react to the RBI Policy announcements tomorrow
wherein some rate cut is expected, so volatility will refuse to go away. Having
said this, it is advised to approach today’s session with high degree of
caution and discipline and very selective approach should be adopted for today.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
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