MARKET REPORT January
03, 2014
After remaining buoyant until late afternoon trade, the
Markets suddenly saw a wave of basket selling, primarily marking the activities
of FII amid low volumes and it caused the Markets to end the day with
significant losses from its intraday highs. The Markets opened on a positive
note remained buoyant until afternoon trade while forming the intraday high of 6358.30.
The Markets resisted around the 6345 levels on expected lines but in the last
hour and half of trade, the Markets saw a huge wave of basket selling by few
FIIs. The low volumes aided the fall and the Markets lost over 140-odd points
from its day’s high. It went on to give the day’s low of 6211 and finally ended
the day at 6221.15 posting a net loss of 80.50 points or 1.28% while forming a
higher top and sharply lower bottom on the Daily High Low Charts.
MARKET TREND FOR TODAY
Today, we would see some weakness persisting in the Markets
in the initial trade. The levels of 50-DMA would now come again in the picture.
Expect the Markets to open on a lower note and flirt with its 50-DMA. In case
of Markets opening below the 50-DMA levels, it would be extremely critical for
the Markets to trade above the 50-DMA levels and maintain that as support at
Close in order to avoid any structural weakness. The intraday trajectory would
be critically important.
The levels of 6260 and 6310 are immediate resistance on the
Charts. The supports exist at 6190 and 6155 levels.
The RSI—Relative Strength Index on the Daily Chart is
49.4233 and it still continues to remain neutral as it shows no bullish or
bearish divergences or failure swing. The Daily MACD has reported a negative
crossover after yesterday’s decline and it now trades below its signal line.
On the derivative front, NIFTY January futures have shed
over 4.95 lakh shares or 2.50% Open Interest. This shows that there has been
offloading of positions but if we try and look at the brighter side, then the
reduction in OI interest is not as massive as the fall that it accompanied
with. This may lead us to believe that there are equal number of shorts that
have been created which has tried to offset the reduction in OI to some extent.
All and all, the Markets may open around its 50-DMA or bit
lower than that but it would be critically important for the Markets to
maintain the levels of 50-DMA as support at Close. The intraday trajectory
would be extremely important. Given shorts in the Markets, we strongly advise
you to refrain from shorts. However, fresh positions too should be avoided and
taken extremely selectively to maintain liquidity. Overall, cautious outlook is
advised for today.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
