Thursday, January 29, 2015

Daily Market Trend Guide -- Friday, January 30, 2015

MARKET REPORT                                                                                        January 30, 2015
The Markets had a session typically affected by rollovers though it continued to demonstrate strength as it consolidated at Close levels to end the day with modest  gains. The Markets saw a negative opening formed its intraday low of 8861.25 in the morning trade. The overall trading range of the Markets remained wider as post such negative opening, the Markets spent rest of the session recovering from morning lows. The remaining session remained quite range bound but the final hour of the trade saw sharp up move in the Markets. The Markets not only shot up in the final hour of the trade but went on to form the intraday high of 8966.65. It finally settled the day at 8952.35, posting a modest gain of 38.05 points or 0.43% while forming a slightly lower top and lower bottom on the Daily Bar Charts.


Though the Markets have shown consolidation at Close levels and have declined at all, still the analysis would continue to run on similar lines as that of yesterday. The Markets would see a quiet opening and the levels of 8985 would continue to act as immediate top. The Markets are trading “overbought” and this forces us to exercise caution even if the Markets continue to demonstrate liquidity driven strength.

The levels of 8985 would remain immediate resistance for the Markets. The supports would exist much lower at 8850 and 8775 levels.

The RSI—Relative Strength Index on the Daily Chart is 76.8426 and it has formed the fresh 14-day high with is bullish. However, it continues to trade in “overbought” zone. It does not show any bullish or bearish divergence. The Daily MACD remains bullish while trading above its signal line.

On the derivative front, the NIFTY saw in-line rollovers as compared to its 3-month average and so did the stock futures. NIFTY has continued to see net addition in Open Interest. However the overall Open Interest in the Derivative segment has crossed the Rs. 1 Trillion mark which certainly should prevent the market participants from throwing caution into the air.

Returning to pattern analysis, the Markets have continued to resist to the upper rising trend line and the levels of 8985 formed would continue to act as immediate top for the Markets. For any fresh up move to occur, the Markets will have to move past this level and while it does so, it will need good amount of conviction and volumes. IMPORTANTLY, if the Markets moves past this level while remaining “overbought”, the sustainability of such up move would be a matter of concern.

Overall, as mentioned, under the present technical structure of the Markets, any consolidation or minor correction, which looks imminent, would be very healthy for the Markets. It would lend sustainability and strength to the present up move that the Markets have seen. Under present circumstances, we continue to reiterate the view of vigilant protection of profits at higher levels. Fresh purchases should be restricted and made on selective basis.

Milan Vaishnav,
Consulting Technical Analyst,
Af. Member: Market Technicians Association (MTA), USA
Af. Member:
Association of Technical Market Analysts, INDIA

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.