MARKET TREND FOR TODAY
May 15, 2013
The Markets had a very range bound session yesterday as it
moved in a very narrow band and showed no strength to give any recovery after
day before yesterday’s knock of over 2% as it ended the day with moderate
gains. The Markets opened on a mildly positive note and it soon dipped into the
red to give the day’s low of 5970.05. However, it quickly made its bottom
around those levels and started crawling back into the green. In the late
morning trade itself, it went on to give the day’s high of 6026.20. It did not
sustain its gain as it came off its lows in the afternoon trade to trade flat
again. It showed no signs of attempting any recovery and spent the rest of the
session trading in sideward manner. It finally ended the day at 5995.40,
posting a moderate gain of 14.95 points or 0.25% while forming a sharply lower
top but almost similar bottom on the Daily High Low Charts.
Today, we may see the Markets opening on a flat to mildly
positive note and look for directions. Global Markets are trading positive
after strong closing of US Markets overnight and this may aid to flat to mildly
positive opening in our Markets. However, going further from there, as the
technicals suggest, the Markets may continue to see some more consolidation or
some corrective activities from higher levels again.
For today, the levels of 6030 and 6045 shall act as
resistance. The supports come in much lower at 5955 and 5920 levels.
The lead indicators remain neutral with downward bias. The RSI—Relative
Strength Index on the Daily Chart is 58.0877 and it is neutral as it shows no
failure swings or any bullish or bearish divergence. The Daily MACD continues
to trade above its signal line. On the Candles, A bullish
harami occurred (where the current small white body is contained within an
unusually large black body). During a uptrend
this pattern implies an end to the up move as the bulls appear to have
exhausted themselves. During an uptrend (which appears to be the case with
NIFTY) the bullish harami pattern is bearish as the bears appear to be
gaining strength as the bulls weaken.
On the derivative front, NIFTY May futures have added over 12.35 lakh
shares or 5.80% in Open Interest. This is certainly a positive factor which may
prevent the Markets getting immediately weak. The NIFTY PCR stands at 1.19 as
against 1.16.
Overall, there is a contradictory reading on the
technical charts and the derivative data. The technicals of the Markets very
clearly suggest that the Markets should remain weak in the immediate short term
and even with the positive opening or short up move, it is likely to see some
paring of gains again. However, the derivative data show massive addition of
Open Interest in NIFTY futures which show creation of fresh long positions.
Given the contradictory reading on the technical
charts and the derivative data, there are clear possibilities of a volatility
returning to the Markets. The positive Global Markets may see the Markets
trading strong initially but it also has equal chances of seeing corrective
actions from higher levels and this will keep volatility ingrained in it. It is
still advised to avoid taking fresh longs in aggressive manner, but at the same
time, profits on the short side should be adequately protected. Neutral outlook
is advised for today.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
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