MARKET REPORT
June 06, 2013
The Markets had an utterly volatile session as traded in
either direction, however took support near its 100-DMA and finally ended the
day with negligible gains. The Markets opened on a negative note on expected
lines and soon drifted further down to give the day’s low of 5883.70. However,
in the late morning trade the Markets came off its highs to trade flat. This
recovery did not last longer as the Markets saw pressure building up again in
the afternoon trade as it pared all of its recovery. In the afternoon trade,
the Markets again attempted to recover and recovered again to trade marginally
in the positive. The Markets spent rest of the session trading in a very capped
and narrow range in sideward trajectory and headed no where, though it
sustained its recovery from lower levels. It finally ended the day at 5923.85
posting a negligible gain of 4.40 points or 0.07% forming a lower top and lower
bottom on the Daily High Low Charts.
MARKET TREND FOR TODAY
Today, expect the Markets to open on a negative note
following weak technicals and even weaker global markets. The weak global
markets shall aid more to the negative opening though speaking purely on
technical grounds, there are chances that our Markets offer resilience post
weak opening. The opening of the Markets shall be around its 100 or 50-DMA
again and therefore the trajectory that it forms shall be critical. Any further
weakness down its 100-DMA or 50-DMA shall induce further weakness.
The levels of 5896 which is the 100-DMA and the level of
5877 which is the 50-DMA of the Markets shall act as supports for the Markets.
As mentioned above, any breach below this would make the Markets further weak.
The lead indicators continue to have a mild downward bias.
The RSI—Relative Strength Index on the Daily Chart is 43.9344 and it is neutral
as it shows no negative divergence or failure swings. The Daily MACD continues to remain bearish as
it trades below its signal line.
On the derivative front, NIFTY June futures have continued
to shed over 2.55 lakh shares or 1.90% in Open Interest. This signifies that
the recovery had not seen any fresh buying coming in and might be more due to
short covering. However, there has been net unwinding of the long positions.
All major Stocks too have reporting shedding of open interest with the rise in
prices.
Having said this, it is also important to note that the weakness
was imminent as the movement of USD-INR was also not in sync with the recovery
in the Markets. The Markets, therefore are slated to open near any of the two
DMAs (100 and 50) and therefore, its intraday trajectory and behaviour vis-à-vis
these two DMAs would continue to be very important.
All and all, there are chances that post weak opening, we
may see a range bound trade or even some minor recovery from lower levels.
Also, there are chances that if these two DMAs are breached, we may see some
more weakness, however, the chances of Markets showing resilience are more. Given this condition, it is advised no to go
on short selling spree and take aggressive positions on the short side, on the
contrary, profits should be protected. With any signs of minor pullbacks,
selective purchases may be considered keeping overall exposure light. Overall,
cautious outlook with mild optimism is advised for today.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
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