MARKET TREND FOR TODAY
April 26, 2013
Yesterday was a session very typical to that of expiry day
as the Markets opened positive and buoyant, traded sideways while it maintained
gains, came off and rose again to end
the day with strong gains. The Markets continued its buoyant move
yesterday as it opened on a positive note on expected lines. It continued to
gain strength until afternoon session but gradually came off from its highs in
the second half of the session as it pared most of its gains. However, purely
led by heavy short covering, the Markets saw a sharp parabolic rise in the last
half hour of the trade as it went on to give the day’s high of 5924.60. It
hovered around those levels for a while and finally ended the day at 5916.30,
posting yet another gain of 79.40 points or 1.35%. The sharp parabolic rise of
almost 50-odd points can be attributed to expiry led short covering. It
continued to form higher top and higher bottom on the Daily High Low Charts.
A word of caution for the Markets here. The Markets are
expected to open on a flat to mildly positive note and look for directions.
However, it becomes very important to note that the Markets have rebounded over
400+ points in last couple of sessions. Any positive opening today will have it
open around its strong pattern resistance and possibility of some minor
correction cannot be ruled out.
For today, the levels of 5935 and 5960 shall act as major
pattern resistance for the Markets today. The supports come in at 5820 levels.
The RSI—Relative Strength Index on the Daily Charts is
65.7369 and it has reached its highest value in last 14-days which is bullish.
It does not show any bullish or bearish divergence. The Daily MACD remains
bullish as it trades above its signal line.
Having said this, it becomes extremely important to note
that the rise of 400+ points that we mentioned has come with consistent
shedding of open interest in the derivative segment. This can be clearly read
as massive short covering rally. These are the shorts that were created in the
system when there was consistent selling in the Cash Markets while shorting in
the derivative segment. Therefore, in spite of this rally, it becomes extremely
important to see if these converts into fresh buying.
Overall, such continuation of parabolic recovery is
unhealthy, especially with consistent shedding of Open Interest. Therefore, at
these levels, there are strong possibilities of the Markets consolidating or
see minor profit taking / correction.
However, there have been some underperforming sectors which shall perform
during this period. We continue to advice to remain highly selective while
making fresh purchases and maintain high degree of caution on the long side.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
