MARKET REPORT August
20, 2014
Though the Markets had a volatile and range bound session
yesterday, it continued to scale fresh lifetime highs and continued to end with
modest gains in a fifth day in a row. The Markets opened on a positive note and
formed its fresh lifetime high of 7918.55 in the early minutes of the trade. It
came of a bit thereafter but never did it go into negative territory. The
Markets spent the entire session in a sideways trajectory and kept advancing
and declining in a 30-odd points range. It did not break this trajectory for
the entire session. Towards the end it did so some recovery and paring of the
same for couple of times and finally ended the day at 7897.50, posting a net
gain of 23.25 points or 0.30% while continuing to form a higher top and higher
bottom on the Daily Bar Charts.
MARKET TREND FOR TODAY
After relentless up move of nearly 275+ points on the NIFTY,
the Markets are expected to take some breather today. Expect the Markets to
open on a quiet and mildly negative note and look for directions. The Markets
have tested the upper trend line of the broadening formation and it is expected
to consolidate around these levels, at least technically speaking. The intraday
trajectory and the volumes at higher levels would continue to throw important
cues for the coming sessions.
For today, the Markets the levels of 7920 and 7945 would act
as immediate resistance for the Markets. The supports would come in at 7860 and
7825 levels.
The RSI—Relative Strength Index on the Daily Chart is 63.63
and it does not show any failure swings. However, the NIFTY has formed a fresh
14-period high whereas the RSI has not yet and this is bearish divergence. The
Daily MACD continues to trade above its signal line and is bullish.
On the derivative front, the NIFTY August futures have added
yet another over 1.93 lakh shares or 1.29% in Open Interest. This implies
continuation of building of fresh long positions in the yesterday’s session.
Checking on the pattern analysis, the Markets have pulled
back nearly 30-odd points after nearly approaching its 50-DMA on the Close
charts. While it did so, it was in a Broadening Formation and even today it
continues to remain in this formation. However, given the current levels it has
tested its upper trend line of such formation and normally, technically speaking,
the any Market would either correct or consolidate around these levels.
Usually, depending upon the participation, i.e. volumes the Markets would
either consolidate or correct or at least briefly halt its advance.
Given the above reading, the strategy for the Markets should
be more or less on similar lines like yesterday. Purchases may be made, though
selectively but such long positions and profits should be very vigilantly
protected at higher levels. If not
today, then in coming sessions, there is all likelihood that one gets trapped
in the distribution selling that happens at higher levels. Overall optimistic
approach but with very high degree of caution is advised for today.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
