MARKET REPORT May
13, 2014
The markets continued with its upsurge in yesterday’s
session as well as it opened positive and remained strong throughout the
session to end the day with yet another robust gains. The Markets opened on a
positive note and remained in upward rising trajectory throughout the session
while it continued to report new intraday highs. It went on to cross the
7000-mark as it formed its intraday high of 7020.05 towards the end of the
session. The Markets successfully maintained its gains until the end and
finally ended the day at 7014.25, a fresh lifetime high, posting a robust gain
of 155.45 points or 2.27% while forming a higher top and higher bottom on the
Daily High Low Charts.
MARKET TREND FOR TODAY
Even though the markets have again become overbought, it
will continue to witness the volatile upsurge, though now on little dangerous
and unhealthy manner. The reason for this is the expected NDA victory from all
the exit polls (though exit polls have been miserably wrong in 2004 and 2009).
The Markets are likely to react to this and on the other hand it would also
react to the IIP and CPI numbers which are not at all encouraging.
For today, the Markets would continue to trade in uncharted
territory and therefore the possible resistance levels can be 7050 and 7065 and
the supports would exist very low at 6905 and 6850 levels.
The RSI—Relative Strength Index on the Daily Chart is
72.7310 and it has reached its highest value in last 14-days which is Bullish.
On the other hand, it has also entered the “overbought” territory. It does not
show any bullish or bearish divergence. The Daily MACD has now reported a
positive crossover and it trades above its signal line.
On the derivative front, the NIFTY May futures have added
over 4.32 lakh shares or 2.98% in Open Interest. This shows that fresh buying
continued. The Market breadth however remained negative slightly favoring the
declines.
Going only by the pattern analysis, if the Markets continue
to surge upwards, it would not get unhealthy and dangerous by all means. Agreed
that the Markets reacting to the positive electoral sentiments and this is
backed by massive cash inflows but the Markets need to consolidate a bit before
resuming its up move. ALSO, the markets should and will take into consideration
the IIP and CPI data, which is not encouraging at all, if not today than
incoming sessions. This greatly reduces any immediate rate cut by RBI as
inflation has continued to remain high.
All and all, going by this, even if the Markets now continue
with their up moves, we strongly recommend that exposures should be curtailed
to very moderate levels. Any fresh purchases, if any should be curtailed to
defensives as some volatile and intermittent corrections just cannot be ruled
out. Overall, while remaining very moderate on exposures, very high degree of
caution is advised for today.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
