Thursday, August 29, 2013

Daily Market Trend Guide -- Thursday, August 29, 2013

MARKET REPORT                                                                                   August 29, 2013
The Markets had a terrible start yesterday as the currency continued to melt but the Markets showed equally sharp recovery on expected lines as it ended the day just flat after recovering over 198-odd points from its day’s low. The Markets opened the day on a negative note and after trading negative for a while, plunged to its day’s low of 5118.85 in the morning trade. The Markets breached its important support at that time. However, the second half of the session saw the Markets making equally sharp recovery. It transformed itself into rising trajectory and not only recovered all of its losses but went to the extent of trading in to the green giving the day’s high of 5317.70 recovering over 198-odd points from its lows.  It finally ended the day at 5285 after coming off a bit while ending the day flat with net loss of 2.45 points or just 0.05% while forming a lower top and lower bottom on the Daily High Low Charts.


MARKET TREND FOR TODAY

Today, we can fairly expect the Markets to open on a positive note and continue with the up move. The Markets are expected to open positive and continue with its recovery, at least in the initial trade. Today being the expiry day of the current derivative series, the session would certainly remain dominated with rollover centric activity and this may keep the Markets either range bound or volatile.

The levels of 5360 and 5425 shall act as immediate resistance for the Markets. The levels of 5215-5200 would continue to remain and act as important pattern support.

As mentioned in our yesterday’s edition the lead indicators continue to show some likelihood of resilience from the Markets. The RSI—Relative Strength Index on the Daily Chart is 33.0504 and it does not show any failure swings. The NIFTY has formed its new 14-day low but RSI has not and this is Bullish Divergence. The Daily MACD continues to trade below its signal line.

On the derivative front, the NIFTY has shown net addition in total open interest. Even decent rollover has been reported in NIFTY and Marketwide segment as well. Today is the expiry day and we would continue to see the rollovers happening as well.

Having said this, it is important to note that the Markets will continue to remain effected by the factors listed in our yesterday’s edition of Daily Market Trend Guide, which are NOT technical factors. However, we would continue to see resilience from the Markets near 5215-5200 levels as any breach would give a self contradictory reading on the Daily Charts. As mentioned in our yesterday’s edition, any breach below those levels would be a negative break down but would go on making the Markets “Oversold” at the same time.

All and all, the Markets are expected to continue with its up move at least in the initial trade. It is advised to refrain from creating shorts even if we see some minor profit taking later in the session. Any weakness would offer a good opportunity to enter at lower levels. In event of the currency stabilizing, we will see continuation of a strong up move. Overall, cautious optimism is advised for today.

Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331


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