MARKET REPORT June
10, 2014
The Markets continued its routine of closing at yet another
peak yesterday after a relatively
volatile session as it ended the day with yet another set of gains taking it
further in euphoric state. The Markets opened on a positive note as expected
and went on to further strengthen itself in the morning trade as it gradually
kept making fresh highs. The Markets saw a wave of selling in the afternoon
trade wherein it stood to lose more than half of its gains. However, the Markets
not only managed to recover again but went on to form the day’s high of
7673.70. It came off a bit from those levels and finally ended the day at
7654.60, posting a net gain of 71.20 points or 0.94% while forming a higher top
and higher bottom on the Daily High Low Charts.
MARKET TREND FOR TODAY
The Markets have risen over 600+ odd points NIFTY in last 6
trading sessions. It now not only trades heavily ‘overbought’ but has not
almost entered a euphoric state. The only thing that keeps driving it up is the
liquidity chasing the Markets. Given this, today also expect the Markets to
open on a flat to mildly positive note and look for directions. Since liquidity
cannot be predicted by technical tools, there are high chances that Markets can
anytime see a corrective dip which stands heavily overdue and impending.
The might continue to trade in uncharted territory. The
levels of 7675 and 7730 might act as immediate resistance. The supports are
very much lower at 7560 and 7480 levels.
The lead indicators continue to paint a overheated and
euphoric picture of the Markets. The RSI—Relative Strength Index on the Daily
Chart is 80.6170 and it does not show any failure swing. However, NIFTY has set
a new 14-period high while RSI has not and this is once again Bearish
Divergence. Further, it continues to trade in “overbought” territory.
On the derivative front, there is change in the behaviour noticed.
While the NIFTY has put up most of its 600+odd points gains while shedding open
interest, yesterday it has reported a addition of over 12.40 lakhs shares or
8.90% in Open Interest. The NIFTY PCR stands at 0.84.
While continue to read pattern analysis, the Markets have
given a upward breakout on the Daily High Low Charts as well. Now, though this
technically generates a fresh buy signal on the Daily Bar Charts, the “overbought”
nature of the Markets continue to pose a serious concern now. While liquidity
continues to chase the Markets, any dip or sharp wave of correction in the
immediate short term just cannot be ruled out.
All and all, while liquidity continues to chase the Markets,
any longs, if any, should be taken on extremely selective note in defensives
while very vigilantly protecting the profits at higher levels. The reason being
the overbought nature of the Markets due to which a corrective action in the
Markets, which can be equally sharp, cannot be ruled out. While remaining
moderately leveraged, high degree of caution should be continued in the
Markets.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
