Thursday, March 27, 2014

Daily Market Trend Guide -- Thursday, March 27, 2014

MARKET REPORT                                                                               March 27, 2014
The Markets traded precisely as analysed in our yesterday’s edition of Daily Market Trend Guide as it remained buoyant in the first half of the session, saw some correction in the second half and ended the day at fresh highs while registering modest gains. The Markets opened on a positive note and traded with smart gains in the first half of the session. The first half saw the Markets trading with gains in sideward trajectory while it formed its day’s high of 6627.45. However, on anticipated lines, the Markets saw some profit taking from higher levels as it suddenly and sharply pared all of its gains in the second half of the session to trade flat. It briefly dipped into negative territory as well while it gave its intraday low of 6580.60. It however recovered back in the positive territory and finally ended the day at 6601.40, posting a modest gain of 11.65 points or 0.18% while continuing to form higher top and higher bottom on the Daily High Low Charts.


MARKET TREND FOR TODAY       

Today, expect the Markets to open on a flat and modestly positive note and look for directions. The Markets have attempted t o achieve a breakout on the Daily Charts but the period of  consolidation would continue as the Markets continue to trade in “overbought” territory with the lead indicators showing some minor signs of weariness. The Markets would continue to see a range bound consolidation. Today being an expiry day, the session would remain dominated with rollovers as well. 

The levels of 6630 and 6655 would act as immediate resistance levels for the Markets. The supports exist at 6575 and 6510 levels.

The RSI—Relative Strength Index on the Daily Chart is 73.2473 and it does not show any failure swings. However, importantly, it continues to trade in “overbought” territory and it has not set a fresh 14-period high while NIFTY has done so. This is Bearish Divergence. The Daily MACD continues to trade above its signal line.

On the derivative front, the NIFTY along with stock rollovers have shown lesser rollover until today. This signifies that the shorts are not being rolled over into the next series and only the long rollovers are being seen. This translates into very strong undercurrent in the Markets which will prevent any major correction and keep the Markets in the consolidation zone for some more time.

Going by the technical charts, the Markets have attempted to break out from the two week consolidation period which was between the levels of 6415-6575. However, though it has managed to achieve it yesterday, the Markets will not see a clear run-away rally as they continue to trade “overbought” with lead indicators showing bearish divergence.

All and all, it is evident from the Daily Charts and F&O data that the Markets will take some more time before it gives a sustainable runaway rally. Before this, it will certainly spend some more time in consolidation. Being expiry today, the session is also likely to see ranged volatility. It is advised to vigilantly protect profits and makes fresh purchases on extremely selective basis. Since undercurrent continues to remain bullish, cautious optimism is advised for today.

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


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