MARKET REPORT June
05, 2014
The Markets consolidate yesterday in a very narrow 25-odd
points range and ended the day flat with nominal losses. The Markets opened on
a flat note on expected lines and formed its intraday high of 7433.30 in the
early minutes of the morning trade. The Markets pared those nominal gains that
it had in the morning and traded flat soon after that. The Markets slipped
marginally in to negative territory and remained in the negative territory for
the most part of the remaining session. It traded modestly downward in a 20-odd
point range thereafter and saw nearly no attempt to recover or give a spurt at
any moment. It went on to form the day’s low of 7391.25 towards the end of the
session and finally ended the day at 7402.25, posting a nominal loss of 13.60
points or 0.18% while forming mildly 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 quiet note again and look for directions. The
Markets have been paring serious open interest since last three sessions; it is
likely that the Markets continues to consolidate or shows some correction which
is imminent and overdue for the Markets to turn healthy. Given this reading,
the analysis once again remains more or less on similar lines that of
yesterday.
For today, the levels of 7430 and 7455 would act as immediate
resistance for the Markets. The supports exist much lower at 7340 and 7260
levels.
The lead indicators continue to show bias towards either consolidation
or downside. The RSI—Relative Strength Index on the Daily Chart is 71.9917.
Though it is neutral and does not show any failure swing or bullish or bearish
divergences, it continues to trade in “overbought” territory. The Daily MACD
too remains bearish as it trades below its signal line.
On the derivative front, the NIFTY June futures have shed
over 7.38 lakh shares or 4.66% in Open Interest. This very clearly indicates
that offloading has continued in the NIFTY futures.
Going by the pattern analysis, as we had mentioned yesterday,
the Markets have attempted to achieve a breakout on the upside on the Close
Charts. While it has done so on the Close Charts, it is yet to achieve a
breakout on the Daily High Low Charts. While this happens, the Markets have
already turned “overbought”. Under
pattern, usually Markets either consolidate or usually corrects from these
levels. Any breakout achieved while remaining “overbought” is unhealthy and
usually not sustained.
All and all, given the above reading, we reiterate our
yesterday’s policy to remain very modestly leveraged in the Markets. Any longs
that are taken should be taken very selectively and on the defensive side.
While protecting profits at higher levels, continuance of very cautious
approach is advised for today.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
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