MARKET REPORT June
12, 2015
Markets had a terribly disappointing session as it gave away
more than it had gained in the previous session to end the day with a deep cut.
The Markets saw a stable opening on expected lines and formed its intraday high
of 8163.05 in the early minutes of the trade. It remained in positive territory
briefly in the morning trade. It was in the late morning trade and thereafter
that bearish grip took hold of the Markets as it slowly pared all of its gains
and dipped into the negative. It remained in the session pressure until the end
of the session which also intensified at the later stage. The Markets went on
to breach the psychological 8000-mark to form the day’s low of 7958.25. No
major recovery was seen and it finally ended the day at the lowest levels since
October last year at 7965.35, posting a net loss of 159.10 points or 1.96%
while forming a higher top but lower bottom on the Daily Bar Charts.
MARKET TREND FOR FRIDAY, JUNE 12, 2015
Markets have ended the day yesterday at the lowest point of the
day. Technically speaking, it is likely to open on a modestly positive note and
trade positive in the initial trade. However, there appear faint chances as
indicated by lead indicators and the F&O data that the Markets may not
significantly move down from current levels. There are faint chances that the
Markets may once again attempt a pullback while holding on to the current
support levels.
The levels of 8000 and 8075 are immediate resistance for the
Markets. The supports exists much lower at 7940 and 7875 levels.
The RSI—Relative Strength Index on the Daily Chart is
34.9029 and it does no show any failure swing. However, the NIFTY has made a
fresh 14-day low while RSI has not. This is Bullish Divergence. Daily MACD
remains bearish while it trades below its signal line. Further on the Candles, An engulfing bearish line occurred (where a black candle's real body
completely contains the previous white candle's real body). If the engulfing
bearish pattern occurs during a downtrend (which appears to be the case
with NIFTY), it may be a last engulfing bottom which indicates a bullish
reversal. The test to see if this is the
case is if the next candle closes above the bottom the current (black) candle's
real body. Therefore, this needs confirmation.
On the derivative front, NIFTY June futures have added over 11.85 lakh shares or 7.67% in Open Interest. This very clearly suggests that significant short positions have been added. NIFTY PCR stands at 0.83.
Coming to pattern analysis, the Markets have breached its
short term double bottom support of 8000. Primarily speaking, this is likely to
induce some more weakness in the Markets. However, having said this, there are
still faint hopes that the Markets may hold this levels at Close as they still
trade within its filter. Further, the lead indicator also indicates a mild
bullish divergence while may not allow the Markets to offer any significantly
more downside. Candles also show a potential bottom formation. However, all
these need confirmation.
All and all, the Markets certainly not out of the woods and
might see some more temporary weakness, at least in the initial trade. However,
factors like heavy addition in Open Interest indicating shorts, bullish
divergence on the lead indicator, and signs of a potential bottom formation on
the Candles, offer some hope of a technical pullback even if the Markets
continue to remain in an overall downtrend. Cautious outlook should be
continued 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
