Sunday, September 21, 2014

Daily Market Trend Guide -- Monday, September 22, 2014

MARKET REPORT                                                                          September 21, 2014
The Markets chose to remain in consolidation stage once again instead of breaking out as it traded in a capped range and ended the day with very nominal gains. The Markets opened on a mildly positive note and after dipping momentarily in the red, it pulled back in the morning trade to form the day’s high of 8160.90. However, the early afternoon trade soon saw paring of all those gains. Markets came off its intraday high by paring all of its gains. It dipped little bit into negative again while forming the day’s low of 8105.35. Thereafter, the  Markets spent rest of the entire session in a very narrow and capped range. It neither saw any sharp pullback nor did it saw any further weakness creeping in. After trading in a narrow range in this fashion, it finally ended the day at 8121.45, posting a net gain of 6.70 points or 008% while forming a mildly higher top and higher bottom on the Daily Bar Charts.
MARKET TREND FOR MONDAY, SEPTEMBER 22, 2014

Just like Friday, the Markets continue to remain in little precarious position. Unless the Markets breach out of the rising trend line and move past its previous top, both of these would continue to act as immediate resistance. Expect the Market to open once again on a quiet note. The intraday trajectory and the behaviour of the Markets vis-à-vis the levels of 8130-8150 levels would remain very crucial.

The levels of 8140 and 8180 would act as resistance and the levels of 7940 and 7910 would act as supports.

The RSI—Relative Strength Index on the Daily Chart is 61.2146 and it remains neutral without showing any bullish or bearish divergence or any failure swings. The Daily MACD is bearish as it trades below its signal line. On the Weekly Charts, the Weekly RSI stands at 73.0196 and it trades in “overbought” territory. Further, though it does not show any failure swing, the NIFTY has formed a fresh Weekly high but Weekly RSI has not yet. This indicates Bearish Divergence. The Weekly MACD continues to trade above its signal line.

On the derivative front, some rollovers seem to have begun. The NIFTY September futures have shed over 8.41 lakh shares or 6.19% in Open Interest. The October series have added 6.58 lakh shares in Open Interest.

Referring to pattern analysis again, the Markets have not broken out comprehensively from the rising trend line. Further, it should be noted that the referred line is “rising” and therefore, each day pauses a higher figure for the Markets to post a break out. Until this happens, this line as well as the previous high would continue to act as resistance and there are chances that the Markets continue to remain in consolidation stage and might see minor profit taking as well.

Going by all this, we reiterate defensive approach in the Markets. Fresh purchases may be made as  stock specific activities would be seen. Sectoral out performance would also be seen but at the same time profits should be protected at higher levels. While keeping overall leverage under control, cautious outlook should be maintained.

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


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