MARKET REPORT August
25, 2014
The Markets traded on analysed lines of Friday as though it
remained positive, spent the entire session in a capped range and ended the day
with modest gains. The Markets opened on a modestly positive note and traded with
very limited gains in the early morning trade. It saw some strength in the late
morning trade as it managed to crawl up to mark the day’s high of 7929.05. In
the afternoon trade, the Markets saw some paring of gains as it came of from
its day’s highs. Most of the gains were pared as the Markets traded nearly
flat. The second half of the session saw the Markets slightly recovering but it
continued to overall trade in just 25-odd points range for the entire session. It
finally managed to end the day at 7913.20, posting a net gain of 22.10 points
or 0.28% while forming a moderately higher top and higher bottom on the Daily
Bar Charts.
MARKET TREND FOR 25TH AUGUST 2014
The Markets are likely to again see a ranged session
tomorrow. The opening might be quiet but the Markets are overall in a topping
out process. Even if the Markets continue to inch upwards the overall session
is likely to be a ranged session capped on upside. The volumes have continued
to remain below average and therefore a concern. The intraday trajectory and
the volumes would continue to critically contribute to shape the direction of
the Markets in coming days.
The range of 7910-7935 and 7965 would act as immediate
resistance on the Daily Charts. The supports would come in at 7855 and 7810
levels.
The RSI on the Daily Chart is 63.8013 and it has reached its
highest value in last 14-periods which is bullish. However, it does not show
any bullish or bearish divergences. The Daily MACD remains bullish as it trades
above its signal line. On the Weekly Charts, the Weekly RSI is 69.5861 and has
generated a sell signal. Though it does not show any failure swing, the NIFTY
has set a fresh 14-period high while Weekly RSI has not. This shows a clear
Negative Divergence on the Weekly Charts. The Weekly MACD, however, trades
above its signal line.
On the Derivative front, since the expiry week begins
tomorrow, no stand along numbers would directly throw any light. However, on
Friday, the NIFTY August futures have continued to shed over 3.17 lakh shares
or 2.16% in Open Interest. This showed unwinding of long positions in the and
some short covering as well in the August series.
Once again, going by the pattern analysis, the Markets have
continued to remain in a Broadening Formation which is usually seen during a
topping out process. This means that the Markets are in the process of marking
a top and this can happen any time. The characteristic of this is the declining
volume that we have been witnessing in many of the NIFTY components. This
means, even if the Markets continue to inch upwards, it would continue to do so
declining or lower volumes and will not give any runaway rise. Any such runaway
sharp rise should be suspected as buying climax.
All and all, we continue on the lines of the advisory that
we issued during the entire last week. To reiterate, it is advised to continue
to remain very moderate on positions and the profits should be monitored and
protected very vigilantly on the higher side. Purchases should be restricted
and made very selectively. Even if the
short term upward move continues, the overall bias remains towards some
more consolidation or impending correction. Being watchful in the Markets is
advised.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
