MARKET REPORT October
17, 2013
The Markets had a session wherein in heavily consolidated on
Tuesday (yesterday being a trading holiday) and ended the day with minor losses
after moving in both the directions. The Markets opened on a stronger and
higher note, but as precisely expected in our Tuesday’s edition of Daily Market
Trend Guide, it formed its day’s high of 6156.30 in the very early minutes of
the trade. Immediately thereafter, it pared all of its gains in the morning trade
itself to trade in the negative territory forming a day’s low of 6056.55 as it
came off nearly 100-odd points from its opening highs. Thereafter, the Markets
slowly crawled back and recovered its losses to trade flat. However, this was
never sustained either and it slipped again into the negative territory. It
finally ended the day at 6089.05, posting a net loss of 23.65 points or 0.39%
while forming a higher top but lower bottom on the Daily High Low Charts.
Going by pattern analysis, the Markets have not been able to
breach its immediate previous tops of 6130-6150 levels and these levels are
likely to continue to act as immediate tops. Today, expect the Markets to open
on a flat to modestly positive note and look for directions. To the most likelihood,
it is shall continue to remain in consolidation phase and the levels mentioned
would continue to act as resistance.
The levels of 6130 and 6155 would
continue to act as immediate resistance on the Charts. The supports come in
much lower at 3020 and 5975 levels.
The RSI—Relative Strength Index on the Daily Chart is
64.0789 and it is neutral as it shows no positive or negative divergence or any
kind of failure swings. The Daily MACD continues to trade above its signal
line. On the Candles, n engulfing bearish line occurred (where a black candle's
real body completely contains the previous white candle's real body). The engulfing bearish pattern is
bearish during an uptrend (which appears to be the case with NIFTY). It then signifies that the momentum may be
shifting from the bulls to the bears.
On the derivative front, NIFTY October futures have over 9 lakh
shares or 4.93% in Open Interest. This is the positive factor as there has been
no unwinding of positions seen.
Given this reading, if we go by pattern analysis, the Markets are
due for a minor correction as the levels of 6130-6150 have held out as
immediate tops and would continue to pose immediate resistance for the Markets.
However, given the derivative figures, the Markets would resist a downside as
it has added in net open interest. However, given both of the readings, we can
fairly conclude that the Markets are likely to see a range bound consolidation
with a downward bias.
Overall, there shall be no immediate and sustainable up move in
the Markets until they move past the levels of 6155. Until this happens, we may
see the Markets consolidating with some amount of volatility ingrained in it.
Any purchases that are made should be made on highly selective basis and shorts
should be avoided. Overall, cautious outlook is continued on the Markets.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
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