MARKET REPORT
June 12, 2013
The Markets saw sharp weakness coming in the moment it
breached its 100 and 50 DMA as it opened lower on back of global weakness and
ended the day with a sharp cut, testing its 200-DMA. The Markets opened on a
negative note following global and technical weakness and in the morning trade
itself saw one way drifting as it went on test its 200-DMA while it gave its
day’s low of 5780.35. However, the second half of the session saw feeble
attempt of the Markets to recover from its day’s lows as it slowly attempted to
inch upwards partially recovering some of its losses. However, this did not
sustain as the last half hour of the trade saw weakness returning and sent the
Markets trading near its lows again. No recovery was seen towards the end and
the Markets finally ended the day at 5788.80, posting a sharp cut of 89.20
points or 1.52% while it formed a sharply lower top and lower bottom on the
Daily High Low charts.
MARKET TREND FOR TODAY
Technically speaking, since the Markets have ended near the
low point of the day, they are expected to open on a modestly negative note at
least in the initial trade and look for directions. Today, the Markets are
expected to open on a modestly negative note and intraday trajectory would be
critically important today. The Markets have closed marginally below its
200-DMA and it would be critically important for the Markets to recover and
trade above its 200-DMA in order to avoid further weakness.
The levels of 5794, which is the 200DMA and the levels of
5865 shall act as immediate resistance. Supports come in at 5765 and 5740
levels.
The RSI—Relative Strength Index on the Daily Chart is
34.6470 and it has reached its lowest value in last 14-days which is bearish.
It does not show any bearish or bullish divergence. The Daily MACD is bearish
as it trades below its signal line.
On the derivative front, the NIFTY June Futures have added
over 13.98 lakh shares or over 11.49% in
Open Interest. The same has been the case with BANKNIFTY futures as well. This
has been for the first time since last so many sessions that addition in open
interest is reported. This signifies that huge amount of shorts have been
created and this can lend support at lower levels preventing the Markets from
breaking down much.
Overall, the Markets have closed marginally below its
200-DMA. Given this, it would be very necessary and critically important for the
Markets to recover and trade above 5794 which is the 200-DMA in case of any
weak opening. The positive factor is the very high amount of Open Interest that
NIFTY has reported to have been added. This can lend support at lower levels.
All and all, given the reading that very high amount of open
interest has been added in NIFTY as well as major stocks, it is advised to
strictly refrain from taking any short positions even if the Markets have
closed marginally lower than its 200-DMA and even if it opens modestly lower
and drifts in the initial trade. There are significant amount of chances that
the Markets limits its losses and find supports. Any downside should be
utilized to make selective purchases. Overall mildly optimistic outlook is
advised for today.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
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