MARKET REPORT May
14, 2014
The Markets continued its upsurge on the third day in a row
and ended with yet another decent gain with a record high closing but at the
same time showed first signs of little tiredness as it came off from its
intraday highs before closing. The Markets opened on a positive note and as it
had been doing in previous two sessions, continued to surge upwards while
making new intraday highs and remaining in upward rising trajectory. The
Markets went on to give a fresh record high of 7172.35 in the afternoon
session. However, the Markets started seeing some profit taking from these
levels. It retraced from these levels in the second half of the session. It
came off near 65-odd points from its day’s high. The Markets finally ended the
day at 7108.75, still posting a decent net gain of 94.50 points or 1.35% while
forming a sharply higher top and higher bottom on the Daily High Low Charts.
MARKET TREND FOR TODAY
The Markets have closed yesterday after coming off from
their intraday highs and therefore might have potentially formed a temporary
top at that levels. The Markets may open on a quiet or modestly positive note
and move upwards in the initial trade but yesterday’s high level might pose a
temporary resistance to the Markets. Though intraday trajectory remains
critically important and so are the FII cash inflows, there are chances that
the Markets show some sign of profit taking from current levels.
Today, the level of 7172 is likely to act as resistance. The
supports now exist much lower at 7040 and 6980 levels.
The RSI—Relative Strength Index on the Daily Chart is
73.1713 and it has reached its highest level in last 14-days which is bullish.
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 May futures have added
nearly 10.34 lakh shares or 6.91% in Open Interest. This very clearly signifies
that fresh buying in the Markets have continued unabated.
Going by the pattern analysis, the Markets now continue to
trade very much in “OVERBOUGHT” territory. Also, the last three trading
sessions have resulted in gains of over 450-NIFTY points and there are bright
chances that the Markets see some correction / profit taking setting in. This
profit taking may not be across the Markets but certainly it can remain sector
specific. Some sectors which have run up too hard might witness some profit
taking at higher levels.
All and all, nearing actually election results, the
volatility in the Markets is expected to remain and even increase. We continue to
reiterate to use this fantastic up move to book profits on long positions wherever
possible. Shorts, however, should be avoided and any fresh position should be
taken extremely selectively. We continue to advice to remain moderate on market
exposure and maintain high degree of caution in the Markets.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
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