MARKET REPORT March
05, 2014
The Markets reversed all of its losses and more in yesterday’s
session as the easing of geo political tensions between Ukraine and Russia
added impetus to the consolidating markets as it ended the day with robust
gains. The Markets did open on a positive note but the opening remained quiet
as the Markets traded in a capped range with limited gains in the morning trade
while it formed its day’s low of 6215.70. However, the Markets gained some
strength in the late morning trade on news of easing of tensions and this
strength fortifies in the late afternoon trade. The Markets kept steadily
making new intraday highs. It went on to form the day’s high of 6302.15 in the
last hour of the trade. It finally ended the day at 6297.95, posting a robust
gain of 76.50 points or 1.23% while forming a higher top and similar bottom on
the Daily High Low Charts.
MARKET TREND FOR TODAY
The Markets yesterday have paned out exactly as analysed in
our yesterday’s edition of Daily Market Trend Guide. Today as well, expect the
Markets to open on a modestly positive note and continue with its up move at
least in the initial trade. Primary speaking, the Markets are expected to inch
upwards moving towards the levels of 6355 wherein it would encounter a minor
Double Top formation.
For today, the levels of 6330 and 6365 would act as
immediate resistance for the Markets. The supports would exist at 6255 and 6210
levels.
The RSI—Relative Strength Index on the Daily Chart is
62.5592 and it does not show any failure swings. The Markets have posted its
14-day high but RSI has not yet and this is bearish divergence. The Daily MACD
is bullish as it continues to trade above its signal line. On Candles, an
engulfing bullish line has occurred. If this pattern occurs during an
uptrend, which is the case with NIFTY, it indicates a potential top.
On the derivative front, the NIFTY March futures have added
over 10.84 lakhs shares or massive 8.08% in Open Interest. This robustly suggests that good amount of
fresh longs have been created and yesterday’s gains are not just merely on
account of short covering.
This time we will have to read lead indicators along with
F&O data as well as pattern analysis of the Charts. Going by pattern
analysis, the Markets should have no problems going around 6350-6360 levels
wherein it is again likely to consolidate. However lead indicators mildly
suggest that the Markets may struggle to reach there and pre-pone the
consolidation or may see some minor profit taking. Again the F&O data that
shows big addition of Open Interest shows that it will resist to any immediate
downside in the Markets.
Going by all this, one thing is clear that even if the
Markets struggles a bit to move upwards, it is not likely to show any
significant downside from there as well. At the most, it may again consolidate
a bit around these levels and upwards. Given this reading, it is advised that
given a brief likelihood of profit taking from higher levels, the existing
profits should be very vigilantly protected now. Also, keeping other indicators
in view, shorts should still be strictly avoided. Overall, continuance of
positive outlook is advised for today.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
