MARKET REPORT April
22, 2014
The Markets displayed a similar pattern in yesterday’s trade
as well as it spent the most part of the session in a very narrow and ranged
movement but saw spurt led by short covering to end the day with gains. The Markets
opened on a modestly positive and quiet note and it spent the most part of the
session in a very narrow 20-odd points range. After trading in sideward
trajectory until late afternoon trade, the Markets saw a sharp up move in last
hour and half of the trade as it went on to form the day’s high of 6825.45. The
Markets came off a bit from those levels and finally ended the day at 6817.65,
posting a net gain of 38.25 points or 0.56% while forming a higher top and
higher bottom on the Daily High Low Charts.
MARKET TREND FOR TODAY
Markets gave a fresh
closing high yesterday and today, we are again set to see a mildly positive and
quiet opening. Apart from global cues, we enter the penultimate day of expiry
of current derivative series and therefore, the session is certainly set to
remain dominated with rollover centric activities. The Markets may attempt to
give a fresh break out on the upside but the sustainability of that breakout
would be in question and the Markets may continue to remain in consolidation
stage for some more time.
For today, the Markets might trade in uncharted territory
with likely resistance at 6830 and 6855 levels. Supports exist much lower at
6770 and 6710 levels.
The lead indicators show some lack of strength required for
the breakout. The RSI—Relative Strength Index on the Daily Chart is 68.3965 and
it does not show any failure swings. However, NIFTY has reached its highest
level in last 14-period whereas the RSI has not and this is a clear Bearish
Divergence. The Daily MACD continues to remain bearish as it trades below its
signal line.
On the derivative front, the NIFTY has shed total of 10.60
lakh shares in total open interest. This is once again a clear indication that
the Markets have shown heavy short covering from the current levels as no major
purchases were witnessed. Further to this, total NIFTY and market wide
rollovers too have remained below its 3 month average.
Going by the pattern analysis, the Markets are yet to give a
clear breakout on the upside. However, again with any fresh breakout on the upside,
the Markets will again turn “overbought” and also, the F&O data suggests
that the Markets may not achieve fresh break out and if at all it achieves, it
can be little less sustainable.
All and all, we still continue to advise to refrain from
creating excessive exposure in the Markets. While avoiding shorts, exposure
should be kept moderate and any downside should be used in making very
selective purchases. Overall, mild positions with moderate caution is advised
for today.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
