MARKET REPORT March
25, 2014
After almost two weeks of consolidation, the Markets
attempted to break out of the of the broad trading range as it attempted to
move past the critical all time high levels of 6575. The Markets yesterday
opened on a positive note and immediately strengthened to move past this level
as it went on to give the fresh life time high of 6591.50. The Markets
maintained this buoyancy throughout the session on average volumes led by
banking and other sectors. The Markets maintained these levels for the entire
session and it finally managed to end the day at a fresh life time high at
6583.50 posting a robust gain of 88.60 points or 1.36% while forming a sharply
higher top and higher bottom on the Daily High Low Charts.
MARKET TREND FOR TODAY
Though the Markets have attempted a breakout yesterday after almost two weeks of
sidewards range bound consolidation, it would be critical to see if the Markets
continues with its up move to confirm the breakout as the Markets now once
again trade in the “overbought” territory. The Markets are expected to open on
a flat note and look for directions and there is high probability that the
Markets continues to once again consolidate around these levels.
For today, the levels of 6595 and 6630 would be immediate
levels wherein the Markets could face resistance. Supports exist at 6550 and
6510 levels.
The RSI—Relative Strength Index on the Daily Chart is
72.1370. Though it does not show any failure swings it trades in “overbought”
territory. Further, the NIFTY has formed a new 14-day high but the RSI has not.
This is a bearish divergence. The Daily MACD continues to remain bullish as it
trades above its signal line.
On the derivative front, the rollovers were witnessed. The NIFTY
March futures have added over 4.96 lakh shares or over 2.48% in Open Interest.
This indicators shows that even though the Markets are overbought, it might
continue to show some strength even while remaining overbought for some more
time.
Going by the pattern analysis, the Markets have given a
upward breakout after consolidating in a broad trading range of 6415-6575
levels. The Markets have attempted to move past the upper band of this range
and has closed above this as well. This generates a fresh buy signal on the
Daily charts. However, we need to keep one important thing in mind that along
with this, the Markets have become “overbought” and the lead indicators are
showing some signs of weariness as well.
All and all, going by the above analysis, even with the
undercurrent remaining certainly buoyant, there are chances that the Markets
see some amount of fresh consolidation from higher levels. Given this reading,
it is advised to refrain from blind purchases and protect profits at higher
levels vigilantly. Only selective purchases may be made. Overall, cautious
outlook is advised for today.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
