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Thursday, June 6, 2013

Daily Market Trend Guide -- Thursday, June 06, 2013

MARKET REPORT June 06, 2013

The Markets had an utterly volatile session as traded in either direction, however took support near its 100-DMA and finally ended the day with negligible gains. The Markets opened on a negative note on expected lines and soon drifted further down to give the day’s low of 5883.70. However, in the late morning trade the Markets came off its highs to trade flat. This recovery did not last longer as the Markets saw pressure building up again in the afternoon trade as it pared all of its recovery. In the afternoon trade, the Markets again attempted to recover and recovered again to trade marginally in the positive. The Markets spent rest of the session trading in a very capped and narrow range in sideward trajectory and headed no where, though it sustained its recovery from lower levels. It finally ended the day at 5923.85 posting a negligible gain of 4.40 points or 0.07% forming a lower top and lower bottom on the Daily High Low Charts.

MARKET TREND FOR TODAY

Today, expect the Markets to open on a negative note following weak technicals and even weaker global markets. The weak global markets shall aid more to the negative opening though speaking purely on technical grounds, there are chances that our Markets offer resilience post weak opening. The opening of the Markets shall be around its 100 or 50-DMA again and therefore the trajectory that it forms shall be critical. Any further weakness down its 100-DMA or 50-DMA shall induce further weakness.

The levels of 5896 which is the 100-DMA and the level of 5877 which is the 50-DMA of the Markets shall act as supports for the Markets. As mentioned above, any breach below this would make the Markets further weak.

The lead indicators continue to have a mild downward bias. The RSI—Relative Strength Index on the Daily Chart is 43.9344 and it is neutral as it shows no negative divergence or failure swings. The Daily MACD continues to remain bearish as it trades below its signal line.

On the derivative front, NIFTY June futures have continued to shed over 2.55 lakh shares or 1.90% in Open Interest. This signifies that the recovery had not seen any fresh buying coming in and might be more due to short covering. However, there has been net unwinding of the long positions. All major Stocks too have reporting shedding of open interest with the rise in prices.

Having said this, it is also important to note that the weakness was imminent as the movement of USD-INR was also not in sync with the recovery in the Markets. The Markets, therefore are slated to open near any of the two DMAs (100 and 50) and therefore, its intraday trajectory and behaviour vis-à-vis these two DMAs would continue to be very important.

All and all, there are chances that post weak opening, we may see a range bound trade or even some minor recovery from lower levels. Also, there are chances that if these two DMAs are breached, we may see some more weakness, however, the chances of Markets showing resilience are more. Given this condition, it is advised no to go on short selling spree and take aggressive positions on the short side, on the contrary, profits should be protected. With any signs of minor pullbacks, selective purchases may be considered keeping overall exposure light. Overall, cautious outlook with mild optimism is advised for today.

Milan Vaishnav,

Consulting Technical Analyst,

+91-98250-16331

Wednesday, June 5, 2013

Daily Market Trend Guide -- Wednesday, June 05, 2013

MARKET TREND FOR TODAY June 05, 2013

What seem like a stable session for the Markets with a mild hope of some recovery fizzled out in the second half as the Markets continued to correct and ended the day with modest losses. The Markets opened on a flat note and soon traded with modest gains as it gave its day’s high of 5981.60 in the morning trade. The Markets continued to trade sidewards but also maintained its morning gains even while trading in a capped range. However the first half saw very mild but consistent drifting of the Markets from its day’s high. In the last hour and half of the trade the Markets pared all of its gains to trade flat and after some time also dipped into the red. It not only traded in the negative territory but also went on to give the day’ low of 5910.25. It did not see any significant recovery in the end and finally ended the day at 5919.45, posting a modest loss of 19.85 points or 0.33% while forming a lower top and mildly lower bottom on the Daily High Low Charts.

The Markets are expected to open on a moderately negative note following weak technicals and weak global cues as well. The Markets have attempted to hold on to their pattern support but have closed a notch below that. With moderately negative opening expected today, the Markets are all likely to open near their 100-DMA levels. It would be very crucially important to see the behaviour of the Markets vis-à-vis the 100-DMA, particularly at Close. Intraday trajectory would continue to remain very important.

For today, the levels of 5945 and 5970 are immediate resistance levels on the Charts. The supports come in at 5896, which is the 100-DMA of the Markets and further at 5872 which is the 50-DMA of the Markets. Any breach below this will induce further weakness in the Markets.

The lead indicators continue to point towards mildly bearish bias. The RSI—Relative Strength Index on the Daily Chart is 43.5501 and it has reached its lowest value in last 14-days which is bearish. However, it does not show any bullish or bearish divergence. The Daily MACD continues to remain bearish as it trades below its signal line.

On the derivative front, NIFTY June futures have shed over 3.91 lakh shares or 2.84% in Open Interest. This signifies that offloading continued yesterday, particularly in the second half of the session. No shorts have been created significantly.

Having said this, it is important to note that neither the technical indicators nor the F&O data suggests any supports coming in at current levels. Today expected negative opening is likely to cause the Markets open near its 100-DMA and any breach below this will take it near to 50-DMA which is very near again. These are the important supports that the Markets are expected to take momentarily, even if it has any negative bias and some technical pullback can be expected, even if it is for a short term.

Given the above reading, even with the modestly negative opening expected today, the Markets are likely to see some support coming in at lower levels near its DMAs as mentioned. In such case, even if the downtrend is to persist, it may see some support coming in at these levels. Under such circumstances, we can see some selective out performance in some stocks which are trading nearly oversold. However, profits should stand protected at higher levels and such purchases should be made on very selective basis. Overall, cautious optimism is advised for today.

Milan Vaishnav,

Consulting Technical Analyst,

+91-98250-16331

Tuesday, June 4, 2013

Daily Market Trend Guide -- Tuesday, June 04, 2013

MARKET TREND FOR TODAY June 04, 2013

The Markets continued to correct yesterday on expected lines as it opened on a flat note but remained in falling channel throughout the day and ended the day with losses. The Markets opened on a flat note and gave its intraday high of 6011 in the early minutes of the trade while it traded in positive for a very brief moment. Thereafter, the Markets transformed itself into falling trajectory and remained in falling channel throughout the day. For the entire session, it continued to drift lower and did not show any strength or attempted any recovery during the day. Markets went on to give the intraday low of 5916.35 towards the end of the day. Though it remained in falling channel after forming a downward trajectory, it did attempt a very minor recovery as it came of its lows little bit and it ended its day at 5939.30, posting a net loss of 46.65 points or 0.78% while continuing to form a lower top and lower bottom on the Daily High Low Charts.

Today also, the Markets are likely to remain in corrective mood. They are expected to open on a flat to mildly negative note and look for directions. The Markets have tested its pattern support yesterday and even drifted a bit below that. If some correction persists in the Markets today, it is likely to go ahead and test its 100-DMA which is 5897. Intraday trajectory would be crucial today to see if the Markets continue with its corrective activities.

For today, the levels of 5965 and 5980 shall act as immediate resistance for the Markets. The supports come in at 5897 which is the 100-DMA for the Markets and further down at 5867 which is the 50-DMA for the Markets.

The lead indicators continue to throw bearish signals on the Daily Charts and the bias remains on the downside. The RSI—Relative Strength Index on the Daily Chart is 44.8378 and it has reached its lowest value in last 14-days which is bearish. It does not show and bullish or bearish divergence. The Daily MACD continues to remain bearish as it trades below its signal line.

On the derivative front, NIFTY June futures have continued to shed over 13.65 lakh shares or 8.99% in Open Interest. This certainly continues to be a very bearish indicators as it very clearly suggests that offloading / unwinding of long positions continues in the Markets and no shorts have been created that can support the Markets statistically later. The NIFTY PCR stands at 0.98 as against 1.04.

Overall, if we go by the F&O data, the correction should certainly continue in the Markets. However, given the technical supports of 100-DMA and 50-DMA in the range, in case of correction, the Markets may find support at these levels. However, given the overall reading, the undertone continues to remain bearish.

To sum up, the immediate indicators and F&O data reading clearly suggests continuation of bearish mood and corrective activities in the Markets. It is advised not to create any aggressive long positions given this reading. However in case of continuing downside, if the Markets approaches any of the DMAs mentioned above, these downside should be utilized to book profits in the short positions and profits, thus, should guarded. Overall, neutral to mildly negative outlook on the Markets is advised.

Milan Vaishnav,

Consulting Technical Analyst,

+91-98250-16331