MARKET TREND FOR WEDNESDAY, MAY 11,
2016
The otherwise stable Markets will react to
the amendments in the Mauritian treaty which affects the GAAR and this will see
the Markets opening on a gap down note. The Markets will see itself opening well
below its 200-DMA opening with the expected opening levels and this will send
the Markets once gain in a consolidation phase. It is very important to note at
this point that this reaction of the Markets is likely to be knee-jerk affair
in the immediate short term and the Markets are likely to be bought into with
any dip.
For today, the levels of 7920 and 7970 are
immediate resistance levels for the Markets. The supports come in at 7810 and
7750 levels.
The RSI—Relative Strength Index on the
Daily Chart is 59.34 and it remains neutral as it shows no bullish or bearish
divergence. The Daily MACD stays bearish as it trades below its signal line.
However, if the Markets remain ranged, it might report positive crossover in
coming days.
On the derivative front, the NIFTY May
futures have added over 2.64 lakh shares or 1.45% in open interest. The Markets
have been adding open interest with every rise over last couple of days
indicating addition in long positions.
Coming to pattern analysis, the Markets
have inched above 200-DMA and yesterday after a modestly negative opening took
support near its 200-DMA to move up again. The logical zone of resistance for
the Markets would be 7970-7990 range and a fresh rally would occur only after
the Markets move past these levels. Having said this, the Markets will react to
the amendments in the Mauritian treaty and this will have its knee-jerk
reaction in the immediate short term. However, it becomes important to note
that though the Markets will are all likely to see themselves opening below the
200-DMA level which is 7827 today, there will be no structural breach on the
Daily Charts. There are also bright chances that any price shock will be bought
into and such gap downs are all likely to be utilized as buying opportunities.
All and all, gap down opening expected
following developments on the Mauritian treaty front but the price shocks are
likely to be utilized as sudden buying opportunities given the overall
fundamentals of the Indian Markets. It is best advised to refrain from creating
aggressive shorts and in fact make very selective and moderate purchases with
every downside that is witnessed. Liquidity should be maintained while
continuing to maintain a overall 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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