Wednesday, January 29, 2014

Daily Market Trend Guide -- Wednesday, January 29, 2014

MARKET REPORT                                                                             January 29, 2014
The levels of 100-DMA stood out as support as the Markets spent an extremely volatile session amid RBI rising Repo Rate by 25 bps while it ended the day with negligible loss. The Markets opened on a quiet note as expected and spent the morning session in a capped range while it gave its intraday high of 6163.60. Thereafter, the Markets saw a very sharp paring of gains after RBI raised the repo rates as it came off over 80-odd points in a very sharp vertical fall while reporting its day’s low of 6085.95. While reporting both the intraday high and the low in the morning trade, the Markets spent the rest of the session recovering from its lows and spending the rest of the session in a capped range. The Markets recovered almost all of its losses and finally ended the day  at 6126.25, while posting a negligible loss of 9.60 points or 0.16% while forming a lower top and lower bottom on the Daily High Low Charts.


MARKET TREND FOR TODAY

The levels of 100-DMA has stood out as support at Close levels and today, we are expected to see some respite from the weakness that we have been seeing. The markets are expected to open on a modestly positive note and look for directions. As evident from the Charts, the Markets have broken support of a trend line and its 50-DMA and therefore it would be critically important for the Markets to move past that levels to resume its up move.

For today, the levels of 6165 and 6210 would act as immediate resistance for the Markets while the levels of 6110 is likely to act as support at Close levels.

The RSI—Relative Strength Index on the Daily Chart is 39.2754 and it has reached its lowest value in last 14-days which is bearish. It does not show any bullish or bearish divergence.  The Daily MACD trades below its signal line. 

On the derivative front, rollover continued as the NIFTY January futures have shed over 18.50 lakh shares or 14.65% in Open Interest whereas the February futures have added over 37.05 lakh shares or 42.84% in the Open Interest.

The pattern analysis shows the Markets breaching the levels of 50-DMA and a rising trend line which coincides as a same levels around 6200-6215. It would be therefore very important for the Markets to move back above these levels for resuming a sustainable up move. So long as it rules below these levels it will have a looming danger of consolidation and some further correction. However, positively speaking, the levels of 100-DMA have stood out as support at Close levels.

All and all, the Markets will find resistance near the 6200-6215 levels while the levels of 100-DMA acting as supports. It is advised to continue to remain light on the positions while maintaining liquidity and making very selective, few purchases and protecting existing profits at higher levels. The directional consensus still lacks however, the room for improvement remains strong and intact. Overall, cautious optimism is advised for today.

Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331

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