MARKET REPORT March
13, 2014
The Markets showed remarkable strength as it continued to
severely consolidate while remaining in the overbought territory as it ended
the day with minor gains after remaining volatile in a capped range. The
Markets opened on a negative note and after trading flat for a while, soon
drifted to lower levels to form the day’s low of 6487.30. However, the late
morning trade saw the Markets showing a sharp rise as it move back in the
positive territory and also formed it s intraday high of 6546.15. Thereafter,
the Markets spent the entire session consolidating and moving in either
direction. It pared those nominal morning gains and dipped into the red again.
However, the Markets again saw some recovery and it finally ended the day at
6516.90, posting minor gains of 5 points or 0.08% while forming a slightly
lower top and lower bottom on the Daily High Low Charts.
MARKET TREND FOR TODAY
Today, the Markets are expected to open on a modestly
positive note and might attempt to move past its previous highs. Even after
such stupendous rise, the Markets are showing no signs of weakening and this
too stands supported by F&O data. The Markets would at the most consolidate
with up ward bias and continue to attempt to gain strength for fresh upside.
Today, the levels of 6545 and 6570 would act as immediate
resistance on the Daily Charts. The supports exist at 6480 and 6445 levels.
The lead indicators
continue to remain in place. The RSI—Relative Strength Index on the Daily Chart
is 72.2642 and it continues to trade in the overbought territory. It remains
neutral as well as it shows no bullish or bearish divergences or failure swings.
The Daily MACD remains bullish as it continues to trade above its signal line.
On the derivative front, NIFTY March futures have added
61,100 shares or 0.33% in Open Interest. This shows that even in this consolidation
there has been no offloading observed, in fact, some minor addition of fresh
longs is seen.
Going by the pattern analysis, the Markets are now
consolidating after a sharp rise that we saw in the previous sessions. This
consolidation has a very strong bullish undertone as the Markets are showing a
Flag Formation on the Daily Charts. This is further supported by F&O data
which have shown no offloading during this consolidation period.
All and all, the Markets are likely to continue to
consolidate and do so with a strong upward bias. In such scenario, it is
strongly advised to avoid shorts and use any downsides to make selective
purchases. The only thing that the Markets are in overbought zone makes us
little cautious otherwise the Markets continue to show very strong under current.
However, until a new high is formed, the exposures should be controlled.
Overall, positive caution is advised for today.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
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