MARKET REPORT
August 27, 2013
The Markets had a very volatile session yesterday as it also
reacted to the neckline resistance levels mentioned in our yesterday’s edition
of Daily Market Trend Guide and also swinged 70-odd points in either direction
to end the day on a flat note. The banking stocks remained subdued and the
currency continued to weaken taking the toll on the Markets. The Markets opened
on a decently positive note and soon gave its intraday high of 5528.70 in the
first hour of the trade. The Markets then gradually pared those gains in the
morning trade to trade flat. The Markets spent the morning session with capped
gains and then dipped into the red to give the day’s low of 5454.45. The
Markets saw a sharp 60-odd point spurt in the afternoon trade where in it
attempted to scale near its previous highs but could not sustain that recovery
either. It pared its gains again and finally settled at 5476.50, posting a very
nominal gain of 4.75 points or 0.09% while forming a higher top and higher
bottom on the Daily High Low Charts.
MARKET TREND FOR TODAY
We had mentioned in our yesterday’s edition of Daily Market
Trend Guide that the behaviour of the Markets vis-à-vis the levels of 5500
would be important. The Markets reacted from those levels yesterday, twice.
This is the double bottom support that the Markets broke on its way down and
this would act as immediate resistance. Today, expect the Markets to open on a
modestly lower note and look for directions.
Today, the levels of 5500 and 5525 would act as immediate
resistance levels on the Charts. The supports would be 5440 and 5415 levels.
The lead indicators continue to remain in place. The RSI—Relative
Strength Index on the Daily Chart is 40.6991 and it does not show any failure
swings or any bullish or bearish divergence. It is neutral. The Daily MACD
continues to trade below its signal line.
On the derivative front, there is net addition reported in
the open interest of NIFTY and Stock futures. We have entered the expiry week
and the session would continue to remain dominated with rollover centric
activities.
From the reading above, two things are evident. First, on
the technical grounds, as expected the Markets have reacted to the 5500 levels,
these are the levels -- the double
bottom support that the Markets broke on the down side and is now likely to act
as resistance. The levels of 5500-5525 would now act as immediate important
resistance for the Markets. Secondly, we have entered the expiry week and the
Markets are bound to remain dominated with rollover centric activities. This
will keep the sessions certainly volatile.
All and all, the reading is that in order to effect the
trend reversal and confirm the recent bottoms, the Markets will have to move
past the levels of 5500-5525 with conviction. Until this happens the sessions
would remain grossly volatile and the consolidation and volatility as we saw
yesterday would continues. There are no indications to short the Markets and
therefore very selective purchases can be made. Currency would continue to
exert pressure on the Markets.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
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