MARKET REPORT April
06, 2016
The Markets finally gave up its attempts of
moving past 7750 levels and these levels continued to remain sacrosanct.
Yesterday, a correction finally set in and the Markets ended the day yesterday
with a very deep cut. The Markets saw a negative opening and traded with capped
losses in the initial trade. Thereafter, the corrective activity intensified
and the Markets remained in downward sloping trajectory for the rest of the
entire session. The weakness intensified after the Markets reacted to the RBI’s
decision to cut Repo Rate by 25 bps and raising Reverse Repo Rate by 25 bps.
The Markets went on to slip almost near to its 100-DMA and went on to form the
day’s low of 7588.65. No major recovery was witnessed and the Markets finally
settled the day at 7603.20, posting a net loss of 155.60 points or 2.01% while forming
a sharply lower top and lower bottom on the Daily Bar Charts.
MARKET TREND FOR WEDNESDAY, APRIL 06,
2016
The Markets are likely to see a modestly
positive opening today. We can expect the Markets to open mildly positive and
trade above its 100-DMA which are 7574 and this level is likely to act as
important support for the immediate short term. It would be important for the
Markets to trade above this 100-DMA which will keep them in a broad range consolidation.
Any breach below 100-DMA will cause the Markets to get further weak.
The levels of 7640 and 7685 will act as
immediate resistance levels for the Markets. The supports come in at 7575 and
7510 levels.
The RSI—Relative Strength Index on the
Daily Chart is 53.3429 and it has reached its lowest value in last 14-days
which is Bearish. Also, the RSI has set a fresh 14-period low while NIFTY has
not yet and this is Bearish Divergence. The Daily MACD still remains bullish
but it is moving towards reporting a negative crossover and the histogram slope
is also seen rapidly decreasing. On the Candles, a Big Black Candle has
appeared. This has established the credibility of the overhead resistance.
On the derivative front, the NIFTY April
futures have shed over 9.26 lakh shares or 4.94% in Open Interest. This makes
unwinding of long positions very much evident.
Coming to pattern analysis, the markets
have held the levels of 7750 and the downward sloping trend line as sacrosanct
resistance. This trend line, which is drawn from 8600 levels now trades around
7700 levels because of its downward slope. On its way up, the Markets will
continue to resistance to these levels with the levels of 100-DMA acting as
immediate support. So long as the Markets trade above 100-DMA, it will remain
in a broad trading range with a downward bias.
Overall, the Markets currently remains in a
broad trading range of 7700-7750 range on the upper side and 7475 levels on the
lower side. Presently it continues to trade with a downward bias with it being
more near to its lower base. So long as the Markets maintain itself above
100-DMA we will see it oscillating in a broad range. Any breach below 100-DMA
will induce further weakness. We continue to reiterate cautious outlook on the Markets.
Milan
Vaishnav,
Consulting Technical Analyst
Member: Market
Technicians Association, (MTA), USA
Member: Association of Technical Market Analysts,
(ATMA), INDIA
+91-98250-16331
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