MARKET REPORT March
31, 2014
After a range bound session, the Markets continued with its
unabated up move as it once again ended the day with gains. The Markets opened
on a positive note and remained in the positive territory throughout the session.
However, post positive opening, the Markets traded in a narrow range with
capped gains and also formed its intraday low of 6643.80 in the afternoon trade
but still continued to remain in the positive territory. The last hour and half
of the session once again saw a spurt in the Markets. It went on to form its
day’s high of 6702.60 and hovered around those levels in until the end of the
session. It managed to end the day at 6695.90, posting a decent gain of 54.15
points or 0.82% while continuing to form a higher top and higher bottom on the
Daily High Low Charts.
MARKET TREND FOR TODAY
Today, expect the Markets to once again open on a positive
note and continue with its up move, at least in the initial trade. However, we
would now like to point out that on immediate short term basis, the Markets now
trade in extremely “overbought” and precarious positions and we now very
clearly advice to refrain from making any fresh purchases as some correction
from higher levels is now imminent.
Today, the markets continue to remain in uncharted territory
and the levels of 6430 may act as resistance. Supports exist at 6640 and 6590
levels.
The RSI—Relative Strength Index on the Daily Chart is
78.4702 and it has reached its highest value in last 14-days which is bullish. But
at the same time, it continues to remain in extremely overbought condition. The
Daily MACD trades above its signal line. On the Weekly Charts, the Weekly RSI
is 69.0647 and this too has reached its highest value in last 14-days. The
Weekly MACD too trades above it signal line.
On the derivative front, NIFTY April futures have added over
8.28 lakh shares or 5.15% in Open Interest. This very clearly indicates that
there has been continuation of build up of long positions in the Markets.
Importantly, as very evident from the Daily Charts,
the Markets have been trading in extremely “overbought “ condition. Further to
this, this has sustained in overbought condition due to very strong and
unabated cash flows from the FIIs. At this juncture, we would like to sound a
great caution that despite every thing, the technicals ultimately tend over and
technical reading suggest that a mild correction is almost imminent in order to
sustain a healthy up move. Further to this, we would also like to
caution that the PE notes, through which the money has been falling are known
to cause a equally sharp correction when they are done with it.
All and all, we should a caution on the high extent of the
overbought condition of the Markets. We strongly advise to refrain from
creating fresh long positions and protect any profits at higher levels. We
might see some weariness in the Markets at higher levels. While avoiding
creating fresh positions, high degree of caution is advised for today.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
