Tuesday, April 1, 2014

Daily Market Trend Guide -- Tuesday, April 01, 2014

MARKET REPORT                                                                            April 01, 2014
Though the Markets ended the day in the green yesterday, it saw some weariness for the first time in last couple of sessions. The Markets opened on a positive note but formed its intraday high of 6730.05 in the early minutes of the trade. Thereafter, for the entire session it remained in downward falling trajectory and kept gradually paring it gains. By afternoon trade it pared all of its opening gains and traded flat. It went on to dip further in the negative and went on to form the day’s low of 6662.40. However, the last hour of the trade saw some recovery from lower levels. The Markets finally ended the day at 6704.20 recovering all of its losses and posting a nominal gain of 8.30 points or 0.12% while forming a higher top and higher bottom on the Daily High Low Charts.


MARKET TREND FOR TODAY

Today, expect the Markets to open again on a modestly positive note and look for directions. However, the trade would remain more or less on similar lines that of yesterday as the Markets are likely to come off after positive opening as we go ahead in the session. The signs of imminent correction appear evident and it would also react to RBI’s credit policy wherein the March CPI is seen around 8.7%.

Today, the levels of 6730 and 6755 would act as immediate resistance for the Markets. The Supports exist at 6650a and 6610 levels.

The lead indicators continue to remain in extremely overbought territory. The RSI—Relative Strength Index on the Daily Chart is 78.8726 and it has reached its highest value in last 14-days. However, it continues to remain in very “overbought” condition. The Daily MACD remains bullish as it trades above its signal line and it is about to enter overbought territory as well.

On the derivative front, NIFTY April futures have added 1.02 lakh shares or 0.61% in Open Interest. This shows no major offloading of positions seen even when the Markets came off from its opening highs.

Going by pattern analysis, the Markets continue to remain in extremely overbought condition. In such cases, even if we see continuation of up move it gets very risky and less sustainable if that happens without any correction or consolidation and especially with the indicators continuing to remain in “overbought” condition. Some amount of correction would be healthy for the Markets.

All and all, the analysis would remain on similar lines that of yesterday and we can see some paring of gains from higher level again. We continue to advice to refrain from making blanket purchase and protect profits at higher levels. Fresh buying should be avoided or should be make extremely selectively. Cautious outlook is advised for today.

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


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