MARKET REPORT
October 03, 2013
After initial weakness, the Markets had a stable session
ahead on Tuesday (Yesterday being a trading holiday on account of Mahatma
Gandhi Jayanti), as it ended the day on a positive note. The Markets opened on
a modestly positive note but saw a knee jerk reaction to the developments in
the US over Government shut down and soon gave its day’s low of 5700.95, taking
support on its 50-DMA of 5703.80. The Markets came back into the green after a
hour long drama and volatility and then spent rest of the session in a rising
trajectory. The Markets kept making gradual highs steadily through the rest of
the session. It went on to give the day’s high of 5786.45, and finally ended
the day at 5780.05, posting a net gain of 44.75 points or 0.78%. However, it
has still formed a lower top and lower bottom on the Daily High Low Charts.
MARKET TREND FOR TODAY
The Markets are expected to open on a flat to mildly
positive note. The Markets are in a strong trading range as it took support on
its 50-DMA in the previous session and today, it is likely to open around its
100-DMA or 200-DMA and this would act as resistance. Given this, the trajectory
that the Markets form post opening would be critical to determine the trend for
today.
For today, the levels of 5840.05, the 200-DMA and 5875 would
act as immediate resistance for the Markets. The supports exist at 5703 in form
of 50-DMA and then at 5675 levels.
The RSI—Relative Strength Index on the Daily Chart is
50.3135 and it is neutral as it shows no bullish or bearish divergence or any
kind of failure swing. The Daily MACD continues to remain bearish as it trades
above its signal line.
On the derivative front, the NIFTY October futures have shed
over 5.58 lakh shares or 3.31% in Open Interest. This is little negative as it
signifies that no fresh longs were added during the modest rally that we saw on
Tuesday.
Given the above reading, it very clearly appears that the
Markets are in a consolidation phase with little downward bias. This is
conclusion is drawn, going by both , the pattern analysis and reading of
F&O data. The Markets have taken support on its 50-DMA on Tuesday, but at
the same time, even if it gets a positive opening, it will have to move past
its 100 and 200-DMA which are in striking distance before it can continue with
any decisive up move. However, given the
reduction in Open Interest seen on Tuesday, there are chances that even if we
see a positive opening, some minor shedding of gains can be seen and some
downside or a ranged session cannot be ruled out.
All and all, on this is for certain that the Markets have
roadblocks ahead before it can continue with any decisive up move. It will have
to move past its 500-DMA of 5840 before a sustainable up move occurs. Given
this, it is likely that we continue to see the Markets in a trading range and
also bit volatile. It is advised to avoid shorting in the Markets as there is
no structural breach on the Charts as yet. At the same time, very selective
purchases should be made while protecting profits vigilantly at higher levels.
Overall, cautious optimism is advised for today.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
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