MARKET TREND FOR TODAY June 05, 2013
What seem like a stable session for the Markets with a mild
hope of some recovery fizzled out in the second half as the Markets continued
to correct and ended the day with modest losses. The Markets opened on a flat
note and soon traded with modest gains as it gave its day’s high of 5981.60 in
the morning trade. The Markets continued to trade sidewards but also maintained
its morning gains even while trading in a capped range. However the first half
saw very mild but consistent drifting of the Markets from its day’s high. In
the last hour and half of the trade the Markets pared all of its gains to trade
flat and after some time also dipped into the red. It not only traded in the
negative territory but also went on to give the day’ low of 5910.25. It did not
see any significant recovery in the end and finally ended the day at 5919.45,
posting a modest loss of 19.85 points or 0.33% while forming a lower top and
mildly lower bottom on the Daily High Low Charts.
The Markets are expected to open on a moderately negative
note following weak technicals and weak global cues as well. The Markets have
attempted to hold on to their pattern support but have closed a notch below
that. With moderately negative opening expected today, the Markets are all
likely to open near their 100-DMA levels. It would be very crucially important
to see the behaviour of the Markets vis-à-vis the 100-DMA, particularly at
Close. Intraday trajectory would continue to remain very important.
For today, the levels of 5945 and 5970 are immediate
resistance levels on the Charts. The supports come in at 5896, which is the
100-DMA of the Markets and further at 5872 which is the 50-DMA of the Markets.
Any breach below this will induce further weakness in the Markets.
The lead indicators continue to point towards mildly bearish
bias. The RSI—Relative Strength Index on the Daily Chart is 43.5501 and it has
reached its lowest value in last 14-days which is bearish. However, it does not
show any bullish or bearish divergence. The Daily MACD continues to remain bearish
as it trades below its signal line.
On the derivative front, NIFTY June futures have shed over
3.91 lakh shares or 2.84% in Open Interest. This signifies that offloading
continued yesterday, particularly in the second half of the session. No shorts
have been created significantly.
Having said this, it is important to note that neither the
technical indicators nor the F&O data suggests any supports coming in at
current levels. Today expected negative opening is likely to cause the Markets
open near its 100-DMA and any breach below this will take it near to 50-DMA
which is very near again. These are the important supports that the Markets are
expected to take momentarily, even if it has any negative bias and some technical
pullback can be expected, even if it is for a short term.
Given the above reading, even with the modestly negative
opening expected today, the Markets are likely to see some support coming in at
lower levels near its DMAs as mentioned. In such case, even if the downtrend is
to persist, it may see some support coming in at these levels. Under such
circumstances, we can see some selective out performance in some stocks which
are trading nearly oversold. However, profits should stand protected at higher
levels and such purchases should be made on very selective basis. Overall,
cautious optimism is advised for today.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
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