MARKET REPORT May
07, 2014
Yesterday’s session turned out in the manner as precisely analyzed in our yesterday’s edition of Daily Market Trend Guide as the Markets
opened higher but pared most of its gains by the end but yet managed to keep
its head in the green. The Markets opened on a positive note and it formed its
intraday high of 6743.45 in the early minutes of the trade. Thereafter the
Markets transformed itself into a falling channel and kept losing the morning
gains gradually. By late afternoon trade, it had pared almost all of it’s gains
while it formed the day’s low of 6701.90. The Markets never really attempted to
pullback but in the last minutes of the trade it saw some minor recovery from
those lows and finally ended the day at 3715.30, posting minor gains of 15.95
points or 0.24% while forming a slightly higher top and higher bottom on the Daily High Low Charts.
MARKET TREND FOR TODAY
Today’s analysis would again remain more or less on similar
lines as that of yesterday. The Markets would see a quiet opening with a
downward bias and they are expected to remain in the corrective mode at least
in the initial trade. Though as mentioned yesterday, intermittent technical
pullbacks cannot be rule out all other indicators continue to point towards
continuation of consolidation / corrective activities in the Markets.
For today, the levels of 6740 and 6775 would act as
immediate resistance for the Markets. The supports exist lower at 6650 and 6610
levels.
The RSI—Relative Strength Index on the Daily Chart is
53.9294 and it is neutral as it shows no bullish or bearish divergence or any
failure swings. The Daily MACD continues to remain bearish as it trades below
its signal line.
On the derivative front, the NIFTY May futures have shed
over 2.45 lakh shares or 1.87% in Open Interest. This signifies that there has
been offloading / unwinding of long positions while the Markets pared its gains
during the day.
Going by the pattern analysis, the Markets may confirm the
top it formed at 6869 levels if it shows no pullback in coming days. It would
mean that it would slowly but gradually inch towards its 50-DMA and it would do
so while witnessing some intermittent technical pullbacks. During this time, in
order to continue with its overall up move the Markets will have to form a
higher top and higher bottom in the channel and move back towards its previous
top. Until this happens the Markets would continue to remain in the corrective mode.
All and all we continue to reiterate our advice to continue
to vigilantly protect profits at higher levels with each pullbacks. However,
since the Markets are correcting and they are not in a downtrend, fresh shorts
should be avoided and any decline should be utilized to make very selective
purchases. While continuing to remain moderate on exposures, cautious approach
is advised for today.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
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