MARKET REPORT May
07, 2015
Yesterday
remained a terribly disappointing session for the Markets as it opened lower,
saw a very sharp downside and continued to remain weak throughout the session
and ended the day with a deep cut. Some amount of weakness in the Markets was not
ruled out but what we saw yesterday was much more that what was expected. Post
witnessing a negative opening, the Markets suddenly saw a very deep 125-odd
point cut in just ten minutes of the trade. Thereafter, it continued to post
gradual lows and formed its intraday low of 8083 in the final minutes of the
trade. No recovery of any nature was seen and the finally the Markets ended the
day at 8097, posting a sharp fall of 227.80 points or 2.74% while forming a
sharply lower top and lower bottom on the Daily Bar Charts. Yesterday’s fall
was largely attributed to Algo Trades by few
big FIIs wherein very large trades get executed at Market Prices and in
the process absorbing every subsequent lower bids.
MARKET
TREND FOR THURSDAY, MAY 07, 2015
Today, Markets
continue to remain on a critical juncture wherein, if we look purely from the
technical angle, it shows a high probability of a rebound. However, today, it
is expected to open on a quiet note and look for directions. Given the near
over-sold nature of the Markets some technical possibilities of a technical
rebound remain. However, the Markets are more guided by few big shot selling
everyday and during such times, technicals tend to remain by the sidelines.
Artificial executions / systemic trades, such as Algo Trades tend to disregard
the technicals.
For today, the
levels of 8145 and 8210 are likely resistance levels for the Markets. The
supports come in at 8050 and 8010 levels.
The RSI—Relative Strength
Index on the Daily Chart is 33.0481 and it does not show any failure swing.
However, the NIFTY has reached its lowest point in last 14-days whereas RSI has
not done so. This is Bullish Divergence. The Daily MACD continues to remain
bearish trading below its signal line.
On the derivative
front, NIFTY May futures have continued to shed over 3.38 lakh shares or 2.02%
in Open Interest.
Coming to pattern
analysis, the Markets have once again completely disregarded the presence of something
as important as 200-DMA while on its way down. This typically happens when one
or two specific factors cause downsides and they very often typically continue
to show disregard to even major technical indicators. However, if we anyways
attempt to take cues from technicals, the Markets may once again attempt a
rebound even if it sees some minor downsides post opening.
Overall, in such
circumstances, it would be unwise to take cue only from the technical
indicators. When Algo Trades are out to get executed they tend to disregard the
technical levels. Given this thing, even if the Markets attempts to rebound, it
is advised to continue to refrain from taking any aggressive positions until
the directional bias is established. Fresh purchases may be made in good stocks
at lower levels as the present conditions provide excellent entry points but
this should be kept limited. Continuance of caution is advised for the day.
Milan Vaishnav,
Consulting Technical Analyst,
Af. Member: Market Technicians Association (MTA), USA
Af. Member: Association of Technical Market Analysts, INDIA
www.MyMoneyPlant.co.in
Af. Member: Market Technicians Association (MTA), USA
Af. Member: Association of Technical Market Analysts, INDIA
www.MyMoneyPlant.co.in
+91-98250-16331
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