Wednesday, September 18, 2013

Daily Market Trend Guide -- Wednesday, September 18, 2013

MARKET REPORT                                                                                September 18, 2013
Markets had  a thoroughly capped session as it heavily consolidated yesterday given range and finally ended the day with minor gains. The Markets opened on a negative note and soon dipped to the day’s low of 5804.90 in the early morning trade. The Markets, though recovered those early losses in the morning session itself as it traded near its previous close. The Markets spent almost entire session in a very narrow 20-odd point range as it continued to hover around its 200-DMA levels. In the last hour of the trade, it did see a feeble attempt to move up which took it into the green and also to its day’s high of 5857.80. It came off a bit from those levels but finally ended the day at 5850.20, posting a very minor gain of 9.65 points or 0.17% while forming a sharply lower top but similar bottom on the Daily High Low Charts.


MARKET TREND FOR TODAY

It is important to note that the Markets have managed to keep its head above the levels of 200-DMA which is 5840.12 today. Today, it is likely to open on a flat to mildly positive note and look for directions. The analysis for today remains more or less similar on yesterday’s lines as it would be very crucial for the Markets to keep its head above 200-DMA and therefore, its behaviour vis-à-vis this levels would be very crucial.

For today, the levels of 5875 and 5905 would act as immediate resistance levels for the Markets. The supports exist at 5820 and 5760 levels.

The RSI—Relative Strength Index on the Daily Chart is 59.8051 and it does not show any bullish or bearish divergence or failure swings. The Daily MACD remain bullish as it trades above its signal line. 

On the derivative front, the NIFTY September futures have went on to shed another 8.44 lakh shares or 5.02% in Open Interest. There has been a steady decline in Open Interest levels since last three session and this clearly indicates that the Markets are set to see one correction coming in.

The indications on the Charts remain very clear. The Markets, with great difficulty have managed to keep its head above the levels of 200-DMA and therefore, even today, the behaviour of the Markets vis-à-vis these levels would remain crucially important. It is also important to note that any dip below the levels of 200-DMA would bring in further weakness in the Markets. Now, if we read the F&O data along with this reading, the steady decline of Open Interest clearly increases the possibility of a imminent correction.

All and all, with this reading, it is advised to refrain from taking aggressive long positions. The outlook remains similar to that of yesterday and it is advised to keep protecting profits wherever possible. Since selective out performance shall always remain, new positions should be taken, but very selectively. Overall, with the possibility of the Markets moving below the levels of 200-DMA, we advice to continue to maintain cautious outlook on the Markets.

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


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