MARKET REPORT May
16, 2016
Markets continued to close
at their new lifetime high yesterday but the session also remained somewhat
dominated with consolidation ahead of election results today. The Markets opened
on a positive but quiet note but soon strengthened further. In the morning
trade, the Markets went on to strengthened further as it gave its intraday
high of 7152.55. However, from the late morning
trade the Markets saw itself paring all of its gains and at one point of time
traded flat. In the afternoon trade, the Markets also went on to dip into
negative to form the day’s low of 7082.55 coming off nearly 70-odd points from
its day’s high. The Markets in the second half continued to trade in a capped range and finally ended the day at
7123.15, posting a gain of 14.40 points or 0.20% while forming a higher top and
nearly similar bottom on the Daily High Low Charts.
MARKET TREND FOR TODAY
After forming a lifetime high of 7172, the Markets have been
severely consolidating since last two sessions. Today, we can expect a modestly
negative start to the Markets but given the election results today, the
volatility is expected to remain at its extremely today with the Markets likely
to swing in both directions due to highly speculative reasons.
The levels of 7172 and 7225 would act as immediate
resistance for the Markets today. The supports exist much lower at 7065 and
6975 levels.
The RSI—Relative Strength Index on the Daily Chart is
76.6909 and it has reached its highest levels in last 14-days which is bullish.
However it continues to trade in “OVERBOUGHT” territory and it does not show
any bullish or bearish divergence either. The Daily MACD continues to trade
above its signal line.
On the derivative front, the NIFTY May futures have another
9.13 lakh shares or 5.37% in Open Interest. This signifies creation of fresh
longs in NIFTY Futures. However, there has been net shedding of Open Interest
in stocks futures that has been reported across key stocks.
Going only by the pattern analysis, the Markets are trading
deeply “Overbought” and some amount of further consolidation or minor profit
taking cannot be ruled out, but in fact it is long overdue and imminent.
However, give the election results today, all such analysis normally takes a
back seat and the Markets normally reacts to such developments in absolutely
volatile and wild manner.
Given the elections results today, as mentioned earlier, the
Markets are set to witness extreme volatility on either side. It is strongly
advised to refrain from taking over leverage and larger exposure in the Markets.
Retail investors / traders should wait for the trend of the Markets to get
clear and then start taking moderate positions. Overall, high degree of caution
should be continued to be exercised for today as well.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
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