Tuesday, August 26, 2014

Daily Market Trend Guide -- Wednesday, August 27, 2014

MARKET REPORT                                                                                            August 27, 2014
The Markets on Tuesday saw much amount of volatility on either sides but it managed to end the day on a flat note after some wild swings. The Markets opened on negative note as expected and after briefly trading in the red, it crawled briefly into the green to form the day’s high of 7915.45. As mentioned in our yesterday’s edition, the Markets resisted at this level to its rising trend line drawn within the broad formation. The Markets, after briefly trading in capped range slipped again into the red. The rest of the session saw the Markets under pressure as it kept forming new lows gradually. In the late afternoon trade the Markets went on to form the day’s low of 7865.45. The last hour and half of the trade saw some sharp rollover related short covering as the Markets managed to recoup nearly all of its losses. It finally managed to end the day nearly flat at 7904.75, posting a very minor loss of 1.55 points or 0.02% while forming a lower top and lower bottom on the Daily Bar Charts.


MARKET TREND FOR WEDNESDAY, 27TH AUGUST, 2014

Tomorrow’s analysis continue to remain more or less on similar lines like today. The Market opening and its subsequent behaviour vis-à-vis the levels of 7910-20 zone would critically affect the trend. It would be necessary for the Markets to maintain levels above of this along with reasonable volumes in order to avoid any further pressure coming in. Over and above this, the rollovers too would dominate as we enter the penultimate day of expiry.

The levels of 7910-20 zone and 7965 would continue to act as resistance levels.  The supports would come in at 7840 and 7805 levels.

The RSI—Relative Strength Index on the Daily Chart is 62.9500 and it remains neutral as it shows no bullish or bearish divergences or any failure swings. The Daily MACD continues to remain bullish as it trades above its signal line.

On the derivative front, NIFTY rollovers continued as August series shed over 23.21 lakh shares or 18.09% in Open Interest while NIFTY September series saw addition of over 23.93 lakh shares or 56.93% in total Open Interest. The NIFTY PCR saw a negligible change over the previous day.

Taking a look at pattern analysis, again the reading remains more or less same like that of yesterday. The Markets continues to remain on broadening formation and within that it is resisting to a rising trend line inside that. The net effect is that the Markets will continue to consolidate in near term and in case of up move will not see a breakaway rise while it continues to remain in the  broad pattern.

Overall all, the Markets are continued to see a ranged movement with some amount of volatility remaining ingrained in it. Volatility would also be induced by rollovers as we are in the penultimate day of expiry of current series. Keeping this and other overall technical structure of the Markets in view, it is continued to be advised to avoid making over-purchases. Any up moves within the broad range should be utilized to protect profits at higher levels. Cautious outlook is continued to be advised.

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



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