MARKET REPORT June 20, 2013
The markets saw a volatile session again as the caution
reigned before the FOMC meet that began yesterday. However, post negative
opening, the Markets ultimately managed to hang on its support levels of
200-DMA at Close and ended the day with moderate gains. The Markets opened on a
negative note and in the morning session itself, it drifted further to give the
day’s low of 5777.90. The Markets continued to trade with capped losses in a
very narrow band in between which it kept making feeble attempts to recovery.
The second half of the Markets saw some recovery as the Markets managed to
pullback and trade in the positive. It went on to give the day’ high of 5828.40
in the final hour of the trade. It hovered around those levels and finally
ended the day at 5822.25, posting a moderate gain of 8.65 points or 0.15% while
it formed a lower top and lower bottom on the Daily High Low charts.
Today, we are all set to see a gap down opening in the
Markets today. This would be the reaction to the hawkish FOMC statement,
contrary to the expectations wherein the Fed indicated that it would start
tapering with the QE by end of this year and mid end with it completely in
2014. This is likely to affect the liquidity that we have been seeing in last
couple sessions and it will not be taken in good spirits and the Markets are
likely to give a knee-jerk reaction to this.
For today, the levels of 5900 would continue to act as
immediate resistance, however the support would come in around 5760 and 5710
levels.
The lead indicators continue to remain neutral. The RSI—Relative
Strength Index on the Daily Chart is 43.0135 and it is neutral as it shows no
bullish or bearish divergences or any kind of failure swings. The Daily MACD
remains bearish as it trades below its signal line.
On the derivative front, the NIFTY June futures have added
yet another over 7.34 lakh shares or 4.13% in Open Interest. This indicates
that even with some unwinding that has been witnessed in cash markets, the
derivative segment have continued to see shorts being built up.
The impact of the indication sent across by the Fed Reserve
would have negative sentimental impact for sure in the short term. The markets
are see to give it a knee jerk reaction as it would certainly affect liquidity
flow to the emerging markets in the immediate short to medium term. This is
especially when this meet was discounted by the Markets and it was taken for
granted by the most of the market participants that FOMC would show indications
to continue with QE and not taper it. The outcome has been the opposite.
With relation to the other Markets, out markets may show
resilience but however, it will not escape the immediate knee jerk reaction. In
such circumstances, it is strongly advised to stay away and remain light on the
positions. The emphasis should be to protect profits wherever possible and
protect longs at cost as well. No hurry should be shown in creating fresh
positions. However, in our case, resilience at lower levels is certainly
expected. Overall, cautious outlook is advised for today.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
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