MARKET REPORT
The caution reigned heavier than optimism as the Markets
declined for the sixth day in a row after a stable and positive start ahead of
RBI Credit Policy that is slated to come in later today. The Markets opened on
a stable and positive note and gave its intraday day of 6190.55 in the early
minutes of the trade. The entire morning session saw the Markets moving in much
capped range while resisting further upside. The Markets gradually gave up in
the afternoon session to trade flat as it pared its morning gains. It slipped
further into negative in the last hour and half of the trade and went on to
give the day’s low of 6133. It ended the day a notch below its 50-DMA at
6139.05, posting a net loss of 15.65 points or 0.25% while forming a higher top
and higher bottom on the Daily High Low Charts.
MARKET TREND FOR TODAY
Today, the analysis remains more or less on the similar
lines that of yesterday. The Markets are slated to react to the RBI Credit
Policy coming in later today. Expect the Markets to open on a modestly positive
note today and remain in capped range until the RBI comes up with the policy.
The Markets would give its knee-jerk reactions to this later. Consensus is on a
rate hike of 25bps. It would be critically important for the Markets to
maintain levels above its 50-DMA.
For today, the levels of 6195 and 6230 are immediate
resistance on the Daily Charts. The
levels of 6115 and 6070 are immediate supports barring the 50-DMA levels.
The RSI—Relative Strength Index on the Daily Chart is
47.1796 and it has reached its lowest value in last 14-days which is bearish.
Also, the RSI has set a new 14-day low while NIFTY has not and this is bearish
divergence. The Daily MACD remains bearish as it trades below its signal line.
On the derivative front, NIFTY December futures have shed
5.96 lakh shares or 2.66% in Open Interest. This shows that there has been
shedding of long positions as there has been heavy caution ahead of RBI Policy.
Given all this, the Markets show some signs of temporary
weakness. It has closed a notch below its 50-DMA at Close but stays comfortably
within its filters as of now. It would be critically important for the Markets
to maintain and trade above its 50-DMA and any significant breach below this
level is likely to bring in temporary weakness. Though there has been a
consensus on the rate hike of 25 bps, any surprise on either side would make
the markets extremely volatile.
All and all, there are high chances that the Markets remains
in a capped range in the beginning and also show quite good amount of
volatility in the afternoon trade. In case of weakness, it is strongly advised
to refrain from creating shorts. The defensives can out perform and sectoral
out performance is likely to be seen. Given the lack of directional bias, it is
advised to avoid over exposure in the Markets and maintain current positions.
Overall, cautious outlook is advised for today.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
