MARKET REPORT
June 21, 2013
The indication of early tapering of QE sent shock waves
across the global markets and obviously India was no exception. The Markets
opened gap down and continued to lose ground until the end to end the day with
very deep losses. The Markets opened gap down of around 50-odd points but
further intensified its cuts after few minutes of the trade. Until afternoon
trade, the Markets continued to trade sideways with cuts in the range of
110-130 odd points on the NIFTY. However, the second half of the sessions saw
these losses widening further. The Markets lost further ground and went on to
give the day’ low of 5645.65. Not even a weak attempt of recovery was seen at
any moment. The Markets finally ended the day at 5655.90, posting a very deep
cut of 166.35 points or 2.86% while forming a sharply lower top and lower
bottom on the Daily High Low Charts.
MARKET TREND FOR TODAY
The markets are again expected to open with a modest cut and
look for directions. The Markets along with all other global stock, commodity
and forex markets have set themselves in for a major realignment / readjustments
after the Fed Reserve’s indications. However, though we feel that the Markets
are over shooting in its reaction, it would be some time by which they are
expected to stabilize. The intraday trajectory would be crucial and
intermittent pullbacks cannot be ruled out.
For today, the levels of 5610 and 5575 are immediate
supports on the Charts.
The lead indicators show mild possibility of resilience as
they have resisted this weakness. The RSI—Relative Strength Index on the Daily
Chart is 33.3906 and it does not show any failure swings. The NIFTY has reached
its lowest value in last 14-days but the RSI has not, and this is bullish
divergence. The Daily MACD continues to trade bearish, below its signal line.
On the derivative front,
the NIFTY June futures have added massive over 29.99 lakh shares or
16.19% in Open Interest. Similar has been the trend with BankNifty and other
key stock futures who too have reported massive addition in Open Interest. This
signifies that there has been huge addition of shorts in the system.
Overall, if we read only the technicals, there are fair
chances of Markets taking support after opening on a weaker note. Short positions
have been continuously added. However, technicals should not be read on stand
alone basis. So long as global realignment continues, our Markets will tend to
remain volatile however chances of sharp intermittent pullbacks cannot be ruled
out at all.
All and all, opening of the Markets and the intraday
trajectory it forms would be critical for today. It would be necessary that the
Markets attempts to find a bottom after initial weaker opening. The lead
indicators have shown some resilience but, as said above, they cannot be read
on stand alone basis. However, massive shorts that exist in the system would continue to pave way of
sharp intermittent pullbacks. The Markets will remain volatile. Retail
investors are advised to strictly refrain from creating fresh shorts. Fresh
longs should be created very selectively and liquidity should be preserved to
maintain open positions. Caution is advised for today.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
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