Friday, March 28, 2014

Daily Market Trend Guide -- Friday, March 28, 2014

MARKET REPORT                                                                                March 28, 2014
The overbought markets continued with its unabated up move while it corrected a bit in the last hour of the trade but still continued to end the day on fresh life time highs. The Markets opened on a positive note and kept gaining gradual strength in the first half of the session. The Markets saw a sharp spurt on the upside in the afternoon trade wherein it went on to record its fresh lifetime highs of 6673.95. However, the last hour of the trade saw some sharp paring of gains as the Markets came off its highs. It gave away more than half of its gains in the last thirty minutes of the trade. It hovered around those levels and but still managed to end the day at 6641.75, posting a net gain of 40.35 points or 0.61% while continuing to form a higher top and higher bottom on the Daily High Low Charts.


MARKET TREND FOR TODAY

The March series have ended with much buoyancy and the April series is slated to open on a  positive note as well. The F&O data shows that the strength persists in the Markets but it is high time that the Markets should show some consolidation and today it is likely that post positive opening, the Markets are in the correction mode, or at least consolidate from higher levels.

Today, the levels of 6573.95 would act as immediate resistance for the Markets. This level has become a immediate top for the Markets and there would be no further sustainable up move until the Markets move past the levels of 6573-6600 levels. Supports exist at 6510 and 6425 levels.

The lead indicators continue to remain weary. The RSI—Relative Strength Index on the Daily Chart is 75.6619 and it has reached its highest value in last 14-days which is bearish. It does not show any bullish or bearish divergence but continues to remain heavily “overbought”. The Daily MACD remains bullish as it trades above its signal line. 

On the derivative front, the NIFTY April series have begun with fresh addition of Open Interest. This is bullish. Also, the NIFTY PCR is as low as 0.81 and this is at very comforting levels. The main reason for this is that the shorts that were covered up in the March have NOT been rolled over into April. Only longs have been rolled over.

Going by the patter analysis, the Markets continue to trade in overbought  territory. Though it has achieved a breakout, there are fair chances that it now comes in corrective more and consolidates in a given range. In order to have this breakout sustain some amount of consolidation now become imminent.

All and all, we are set to see some positive opening again but it is high time that it sees some consolidation. The breakout that it has achieved shall be difficult to sustain if such unabated rise continues. Though this is supported by heavy liquidity, it would tend to get unhealthy if some consolidation is not seen. It is strongly advised not to resort to blanked buying and protect existing profits very vigilantly. Heavy caution is advised for today.

Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331



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