MARKET REPORT
June 27, 2013
What seemed as a stable session for the Markets turned out
to be a dampener as the Markets lost some ground in the last hour of the trade
on back of heavy rollovers and currency weakening while in the process
continuing to add open interest. The Markets opened on a modestly positive note
and soon gave its intraday high of 5635.25 in the early hour of the trade.
Though not able to sustain at those levels, the Markets pared those gains to
trade flat. However, the Markets then continued to trade in a very capped and narrow range with
modest gains throughout the session, more or less in sidewards trajectory. The
Market saw some sudden pressure coming in as the Markets drifted lower to dip
into negative and give day’s low of 5579.35. After hovering around those levels
for a while, the Markets finally ended the day at 5588.70, posting a modest
loss of 20.40 points or 0.35% while forming a lower top but higher bottom on
the Daily High Low charts.
MARKET TREND FOR TODAY
We have been mentioning in our previous editions of Daily
Market Trend Guide that one should avoid shorts as the Markets are relentlessly
adding Open Interest and thereby creating heavy shorts. Today, we are set to
see a gap up opening and the Markets are likely to open and trade strong, at
least in the opening trade. It would be important for the Markets to sustain
opening gains. However, today is last day of expiry of current derivative
series and volatility shall remain because of this.
For today, the levels of 5665 and 5710 are immediate
resistance levels on the Charts. The supports come in at 5570 and 5540 levels.
The lead indicators show positive bias. The RSI—Relative Strength
Index on the Daily Charts is 31.7156 and it does not show any failure swings. However,
the NIFTY has set a new 14-day low but RSI has not and this is BULLISH
DIVERGENCE. The Daily MACD remains bearish as it trades below its signal line.
On Candles, If the engulfing bearish
pattern occurs during a downtrend (which appears to be the case with NIFTY), it
may be a last engulfing bottom which indicates a bullish reversal. The test to see if this is the case is if the
next candle closes above the bottom the current (black) candle's real body.
Overall, the Markets had been creating very huge open
interests in last couple of session even though the FIIs were selling in the
Cash Segment. This implies that heavy shorts were created in the system and at
one point of time, a spate of short covering, usually equally sharp was
imminent. This is further supported by stable global markets since last two
sessions. There are fair chances that the Markets attempts to find bottom today
and attempts a trend reversal.
All and all, with strong opening likely, we continue
to advice to hold on to open positions. We also strictly recommend not attempting
any fresh shorts at higher levels as such upside may continue. The Markets may
see some volatility on account of expiry day but it would be important for the
Markets to sustain and capitalize on the morning gains. Overall, positive
outlook is advised as the bias remains positive.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
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