MARKET REPORT
September 04, 2013
The Markets took a breather after rise of over 450-odd
points in three days but the correction it saw turned out to be much deeper
than expected as the Markets ended the day yesterday with a deep cut. The
Markets opened on a modestly positive note and it made its intraday high of
5580.95 in the very early minutes of the trade. However, immediately after
opening on a modestly positive note, the Markets transformed itself into
falling trajectory and remained so for the rest of the entire session. It kept
making gradual lows after paring its opening gains. Towards the end, it went on
to give the day’s low of 5323.75, coming off over 257-odd points from its
opening highs. It finally ended the day at 5341.95, posting a net loss of
209.30 points or 3.77% while forming a higher top but sharply lower bottom on
the Daily High Low Charts.
MARKET TREND FOR TODAY
Today, expect the Markets to open on a flat to mildly
positive note but might see some more corrective action, at least in the initial
trade. However, at the same time, there are chances of the Markets trying to
find bottom again from lower levels. Intraday trajectory would be crucially
important for today’s trend.
For today, the levels of 5380 and 5425 would be immediate
resistance levels for the Markets. The supports come in at 5305 and 5270 levels
on the lower side.
The lead indicators do not show much damage as yet.
The RSI—Relative Strength Index on the Daily Chart is 40.2970 and it does not
show any bullish or bearish divergence or any kind of failure swings and is
therefore neutral. The Daily MACD still continues to remain bullish as it
trades above its signal line. On the Candles, An engulfing
bearish line occurred. If the engulfing bearish pattern occurs
during a downtrend (which appears to be the case with NIFTY), it may be a last
engulfing bottom which indicates a bullish reversal. The test to see if this is the case is if the
next candle closes above the bottom the current (black) candle's real body.
On the derivative front,
the NIFTY September futures have added over 6.29 lakh shares or 3.49% in Open
Interest. This signifies some creation of short positions in the Markets, but
not so as the quantum of fall suggested earlier.
Having said this, the
Markets are poised to move on either side and there is no directional bias that
is clear in the Markets. However, with no damage on the lead indicators as yet,
we can fairly expect the Markets to find support and recover from the lower
levels in case of mildly negative opening.
All and all, the Markets
are likely to open modestly weak and trade so at least in the initial session.
But given the lead indicators, there are fair chances that the Markets attempt
to find some support at lower levels. Given this reading, it is advised that
given the velocity of yesterday’s correction, retail traders / investors should
refrain from taking any short positions in the Markets. Very selective
purchases may be made at lower levels while protecting profits on existing
positions.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
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