MARKET REPORT
August 28, 2013
Carnage in the currency markets took its heavy toll on the
Markets as the Rupee saw a fresh single day fall in 18-years and the Markets
too ended the day with deep losses after a weak start. The Markets opened on a
negative note and post opening remained in falling trajectory and never saw any
attempt to recover in the entire session. The food security bill, that the
Government passed is seen as a move to
achieve political benefits at the cost of bad economic planning. The Markets,
for the entire session, remained in downward falling trajectory. The Markets
saw the pressuring being intensified towards the end as it saw the day’s low of
5274.25. The Markets finally ended the day at 5287..45, posting a deep loss of
189.05 points or 3.45%.
MARKET TREND FOR TODAY
Today as well, expect the weakness to continue in the
Markets and expect the Markets to see a lower opening again. However, given the
lead indicators, today’s session would be extremely crucial as the Markets
would see the opening near its major support and the key would be to see if it
recovers post opening lows. Intraday trajectory would continue to be heavily
crucial. The most confusing situation would arise when any dip below the
levels of 5200 would see a negative break down in the Markets and would also
see them oversold at the same time.
Today, the levels of 5230 and 5190 would act as immediate
supports for the Markets. The resistance
on the upside would be 5345 levels.
The lead indicators indicate possibility of the Markets
showing resilience ONLY IF we consider the technical factors. The RSI—Relative Strength
Index on the Daily Charts is 33.1361 and it does not show any failure swings.
However, the NIFTY has reached its fresh 14-day low but the RSI has not and
this is Bullish Divergence. The Daily MACD remains bearish as it trades below
its signal line.
On the derivative front, the total NIFTY futures have
reported net addition of open interest in the NIFTY as well as Stock
derivatives. This signifies that creation of heavy shorts have continued in the
system.
The overall reading is two fold – First, there are many
other factors apart from technical and fundamental that are weighing heavy on
the Markets. The external economic outlook, increase in oil and gas prices,
increase in gold price as well as crude and the most monstrous of all -- the horrendous fall and depreciation and
weakening of Rupee. These factors are making the Markets totally defy the
technical factors. However, if we take aid of the technical reading,
there are feeble chances that the Markets may see some recovery post opening on
a weaker note. The opening would be around
its support levels it would be crucial to see if it recovers post opening weak.
The another contradictory reading would be – if the Markets drops below 5200,
it would technically give a sell signal on the Charts, BUT the Markets would
turn “OVERSOLD” at those levels…!!
Given all the contradictory readings, the current technical
condition, and keeping in view the external factors other than the
technical that are weighing down the
Markets, it is advised that the retail traders and investors should continue to
stay away OR create very light positions on the long side taking benefit of
these low prices. However, it is advised to maintain adequate liquidity at any
point of time while maintaining heavy caution in the Markets.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.