MARKET REPORT June
11, 2014
What seemed to be a correction setting in initially turned
out to be a consolidating session as the Markets recovered from its initial
lows to end the day on a flat note. The Markets expectedly opened on a quiet
note and in the morning trade soon slipped to form the day’s low of 7579.30.
However, after forming this low in the morning trade, the Markets spent the
rest of the session gradually recovering from these levels. The recovering
trend remained constant fro the rest of the session lead by sectoral out
performance and by the end of the session, the Markets recovered nearly 102-odd
points as it formed the day’s high of 7683.20 while trading briefly in to the
green. The Markets came off a bit from those levels and finally ended the day
at 7656.40 with a net gain of 1.80 points or 0.02% while forming a higher top
and lower bottom on the Daily High Low Charts.
MARKET TREND FOR TODAY
Markets continues to remain overbought and given the pattern
analysis, the behaviour of the Markets in coming days is likely to remain
similar to what we saw yesterday. The Markets are again expected to open on a
quiet and flat note and look for directions. Even if it continues to move up,
there remain great amount of chances that the Markets witnesses the correction
that it witnessed yesterday in the early trade. Some amount of consolidation /
correction remains imminent at these levels which cannot be discounted and
ruled out.
For today, the levels of 7690 and 7735 might act as
immediate resistance for the Markets. The supports exist much lower at 7580 and
7510 levels.
The lead indicators continue to paint a precarious picture.
The RSI—Relative Strength Index on the Daily Chart is 80.6661 and it does not
show any failure swings. However, like yesterday, again the NIFTY has formed a
new 14-day high while the RSI has not yet and this make a clear Bearish
Divergence again. Further, it continues to trade in “overbought” territory. The
Daily MACD trades above its signal line.
On the derivative front, the NIFTY June future added over
9.20 lakh shares or 6.07% in Open Interest. This shows addition of some longs
from lower levels that we saw yesterday.
Going by the pattern analysis, the Markets continues to
remain in “overbought” territory and given this and up move will remain always
open to any sharp correction. This remains overdue, especially given the
reading of the lead indicators and the continuing Bearish Divergences.
All and all, we continue to maintain a cautious stand of the
Markets. The fresh purchases should be kept limited to highly selective and
sector specific stocks and defensives. Here as well, the profits on the upside
should be extremely vigilantly protected. We continue to reiterate our advice
of maintaining very moderate exposures with high degree of caution in the
Markets today.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
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