Tuesday, March 11, 2014

Daily Market Trend Guide -- Tuesday, March 11, 2014

MARKET REPORT                                                                                  March 11, 2014
The Markets continued to inch upwards for the fifth day in a row as it registered moderate gains yesterday while continuing to remain in “overbought” territory. The Markets opened on a flat note showing much resilience to the Asian weakness and traded with much capped range in the early minutes of the trade. After opening flat, the markets momentarily dipped in the negative territory in the early morning trade while it registered its day’s low of 6487.35. It continued to trade in the negative territory until the afternoon trade but traded with very limited losses. In the second half of the session, the Markets moved in the positive territory on back of some more buying by the FIIs and moved towards giving the day’s high of 6562.20 in the late afternoon trade. The Markets came off a bit from those levels and finally ended the day at 6537.25, posting a modest gain of 10.60 points or 0.16% while continuing to form a higher top and higher bottom on the Daily High Low Charts.


MARKET TREND FOR TODAY

The Markets has showed first signs of weariness at higher levels yesterday though it continued to end the day with modest gains. This tends to happen and Markets tend to remain “overbought” for some time during such up moves. For today, expect the Markets to open on a flat and quiet note and look for directions again. The intraday trajectory that the Markets forms would be critically important today and there are bright chances that the Markets continue with its consolidation at higher levels.

For today, the levels of 6560 and 6585 would act as immediate resistance for the Markets. The supports exist at 6485 and 6450 levels.

The RSI—Relative Strength Index on the Daily Chart is 75.0965 and it has reached its highest value in last 14-days which is bullish. However, it continues to grossly remain in “overbought” territory. It does not show any bullish or bearish divergence. The Daily MACD continues to remain bullish as it trades above its signal line. 

On the derivative front, the NIFTY March futures open interest has remained unchanged as it has just added nearly 60,450 shares or 0.33% in open interest. This shows that there was no major buying seen yesterday, over all on net basis and no major unwinding was seen as well. This implies that there was churning of portfolio seen in the Markets yesterday.

Going by the pattern analysis, the Markets clearly continues to remain grossly “overbought”. Given this, with every move on the upside, the Markets are more likely to see some consolidation or minor profit taking from higher levels. The consolidation / mild profit taking in the Markets is now almost imminent and it would be in fact healthy for the Markets to strengthen its base again for sustainable up moves. However, it does happen the Markets continue to remain in such “overbought” territory for some time in case of liquidity driven rallies.

All and all, the Markets are overbought and this certainly warrants some discretion in making fresh purchases. It is continued to be advised, as we have mentioned in our previous edition of Daily Market Trend Guide as well that profits now need to be protected at higher levels. Also, blanked buying should be avoided. It is time to adopt highly stock specific approach and any downsides / consolidation should be used to make fresh purchases. Overall, cautious outlook with controlled exposure is advised for today.

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



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