MARKET TREND FOR TODAY
May 09, 2013
Yesterday’s session remained with much expected volatility
as the Markets moved in either direction
before continuing to end yet another day with minor gains. The Markets opened
on a moderately positive note and after briefly trading into positive in the
morning session, slipped into the red to give the day’s low of 6024.95. The
second half of the day saw the Markets again recovering from its lower levels.
The Markets inched back into the green from its day’s lows and traded in the
positive again. In the last hour of the trade, the Markets saw some more
strength as it went on to give the day’s high of 6083.55. It came off a bit
from there to finally end the day at 6069.30, posting a modest gain of 25.75
points or 0.43%, while continuing to form a higher top and higher bottom on the
Daily High Low Charts.
Today’s session would be important for the Markets again and
the analysis would remain more or less similar as that of yesterday. The
Markets are expected to open on a flat to moderately positive note and look for
directions as they face stiff resistance from a major pattern formation and
would also get overbought as it inches upwards today. The volatility is
expected to stay and intraday trajectory would be crucial.
For today, the levels of 6095-6105 shall act as a stiff
resistance in form of a pattern resistance. There is a Double Top formation
near this levels and this should act as a major resistance. The supports come
in much lower at 6010 and 5975 levels.
The lead indicators stands almost overbought. The RSI—Relative
Strength Index on the Daily Chart is 69.4642 and it does not show any bullish
or bearish divergence but it has reached its highest value in last 14-days. The
Daily MACD continues to remain bullish as it trades above its signal line.
On the derivative front, NIFTY May futures has added over
3.98 lakh shares or nominal 1.98% in the Open Interest.
Having said this, the Markets are showing all signs of a
imminent correction which now is much required which will enable the Markets to
consolidate on its recent recovery for further sustainable up move. Also, with
the Markets trading near its important pattern resistance and also with the
lead indicators almost overbought, any further up move shall would make itself
much unhealthy and not sustainable without a consolidation or a correction.
All and all, given this reading, we continue to sound
caution in taking any fresh long positions in the Markets. The Markets, though
while seeing liquidity driven rally, tends to neglect technicals, but it
certainly makes any purchases made at such higher levels susceptible to any correction. It is thus advised to
strictly refrain from making aggressive purchases and utilize an further up
moves in protecting profits on existing positions. Cautious approach is
continued to be advised.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
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