MARKET REPORT January
27, 2014
The Friday’s session weighed down heavily with multiple
events coming up this week as the Markets opened lower, drifted further down
and ended the day with losses. The Markets opened on a mildly negative note and
formed its intraday high of 6331.45 in the early morning trade. Thereafter, the
Markets never saw any strength coming in as it continued to drift lower. It
traded sideways until the second half of the session and in the late afternoon
trade, drifted even further lower to form the day’s low of 6263.90. After
hovering around those levels for a while, it never really saw any recovery and
ended the day at 6266.75, posting a net loss of 78.90 points or 1.24% while
forming a sharply lower top and lower
bottom on the Daily High Low Charts.
MARKET TREND FOR TODAY
Beginning today, we have expiry coming this Thursday. More
importantly, RBI shall come up later today with the Credit Policy and apart
form this domestic event, there is two-day
FOMC meet beginning tomorrow and fear of tapering would weigh on the
Markets. Given all this, we are likely to see a gap down opening today,
however, the 50-DMA levels of the Markets would come again into play and it
would be critically important to observe the behaviour of the Markets around
these levels.
For today, the levels of 6310 and 6350 would continue to act
as resistance and the levels of 6210 and 6175 would act as immediate support.
The RSI—Relative Strength Index on the Daily Chart is
50.9618 and it continues to remain neutral as it shows no bullish or bearish
divergence or any failure swings. The Daily MACD still continues to remain
bullish as it trades above its signal line. On the Weekly Charts, RSI is
57.6893 and it continues to remain neutral. The Weekly MACD too remains bullish
as it trades above its signal line.
On the derivative front, NIFTY January futures have shed
over 13.01 lakh shares or 7.58% in open interest whereas the February futures
have added over 5.32 lakh shares or 12.22% in Open Interest.
Going by the over all pattern analysis, today, the Markets
are likely to test the 50-DMA once again, and given this scenario, if the
Markets closed below the 50-DMA OR its filters it may bring in temporary
weakness. However, if we read this along with the lead indicators, there are
chances that the Markets finds its support near the 50-DMA or little below that
within its filters and recovers from that. Given these fair chances, we may see
selective stock picking happening from lower lowers and the Markets do not
report a structural breach on the Daily Charts.
Overall above that is mentioned above, the Markets would
also see itself reacting to the RBI Credit Policy and it is expected to do so
after trading in a range in the morning trade. Given all this, it is highly
recommended the once should still continue to refrain from shorts until the
Markets breaches the critical support at close levels. Until this happens, we
would continue to see selective stock buying from lower levels. Overall, while
remaining light on positions and maintaining adequate liquidity, very selective
stock picking may be done at lower levels.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
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