Wednesday, January 8, 2014

Daily Market Trend Guide -- Wednesday, January 08, 2014

MARKET REPORT                                                                                   January 08, 2014
The Markets continued to correct yesterday and ended in red for the fifth day in a row as it slipped below its 50-DMA on low volumes and ended the day with modest losses. The Markets opened on a modestly positive note and formed its intraday high of 6221.50 in the early minutes of the trade. After trading positive for a brief period and in capped range the Markets gave up and slipped into the red in late morning trade. It continued to trade negative in a capped range. It made a brief attempt to recover in the late afternoon trade but gave up again towards close and finally ended the day at 6162.25, posting a net loss of 29.20 points or 0.47% while forming a similar top and lower bottom on the Daily High Low Charts.

MARKET TREND FOR TODAY

Today, we can expect some respite from the weakness that we have been seeing since last couple of days. The Markets are expected to open on a modestly positive note and look for directions. The behaviour of the Markets vis-à-vis the levels of 50-DMA would remain crucial and intraday trajectory, therefore, would continue to remain critically important. The global markets trade stable this morning.

For today, the levels of 6195 and 6240 would act as immediate resistance for the Markets. The supports exist at 6130 and 6105 levels on the downside.

The RSI—Relative Strength Index on the Daily Charts is 44.0995 and it has reached its lowest value in last 14-periods which is bearish. However, it does not show any bullish or bearish divergence on the Charts. The Daily MACD continues to trade below its signal line.

On the derivative front, the NIFTY January futures has remained practically unchanged as it has shed just 48,750 shares or nominal 0.27% in Open Interest. We can fairly conclude that there has been no major shedding of long positions in the Markets with the yesterday’s decline.

The Markets have ended the day below their 50-DMA but is still well within its filter levels. The Markets would see a modestly positive opening today but it would be very critically important for it to see that it maintains those opening gains. The levels of 50-DMA, 6194, would continue to pose mild resistance on the upside.

Overall, with the Markets expected to open positive and with global markets in supportive mode, we may again see the Markets testing the levels of 50-DMA. It would be important for the Markets to move past the levels of 6195 and trade above that. It is advised to remain ultra selective while taking new positions and maintain adequate liquidity to protect open positions. Overall, continuance of positive caution is advised for today.

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


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