MARKET REPORT June
,2014
The Markets on Friday continued to remain in corrective mode
as it ended the day with nominal losses after coming off from its opening
highs. The Markets opened on a positive note and after briefly dipping in the
red, it moved back into the green. In the morning trade the Markets went on to
form the day’s high of 7272.50. However, since then from late morning trade
until the end of the session, the Markets altered its trajectory and formed a
falling channel and it kept paring its gains gradually. By the end of the
session, the Markets had pared all of its gains and also dipped into the
negative territory. It finally ended the day at 7229.95, posting a net loss of
5.70 points or 0.08% while forming a lower top and lower bottom on the Daily
High Low Charts.
MARKET TREND FOR TODAY
Today, expect the
Markets to open on a quiet note and look for directions. To a larger extent,
the Markets are likely to remain in corrective frame of mind as the dismal GDP
Data and the likelihood of the RBI not changing the key rates would weigh on
the Markets. Though technical pullbacks cannot be ruled out, the overall approach
of the Markets is likely to that of continuing correction / consolidation.
The levels of 7255 and 7290 would act as immediate
resistance for the Markets. The supports exist much lower at 7175 and 7110.
The lead indicators continue to point towards continuing
correction in the Markets. The RSI—Relative Strength Index on the Daily Chart
is 64.4901 and it has reached its lowest value in last 14-days which is
bearish. The RSI has formed a new 14-day low but NIFTY has not yet and this is
clear Bearish Divergence. The Daily MACD too has reported a negative crossover
and it now trades below its signal line
which is bearish. On the Weekly Charts, Weekly RSI stands “overbought” at
72.4029 and Weekly MACD trades above its signal line.
On the derivative front, the NIFTY June futures have added
over 13.04 lakh shares or 8.47% in Open
Interest. With the premiums shrinking, it is a clear indication that the fresh
shorts have been initiated in the index futures while offloading continued in
the stock futures positions.
Going by the pattern analysis, the Markets have pattern
support at 7060 levels and the Markets, if not directly, may indirectly test
those levels in the immediate short term though intermittent consolidation and
pullbacks.
All and all, the Markets are clearly in stage of consolidation
with corrective bias. This is particularly evident in the lead indicators and
the Markets will find reasons to drag itself down while reacting to RBI not
raising key rates tomorrow and discouraging GDP and inflation numbers. However,
since shorts exist in the system, intermittent pullbacks cannot be ruled out
but overall bias still continues to be of downside. Any purchases, if any,
should be made very selectively. While protecting profits at higher levels vigilantly,
cautious approach should be continued in the Markets today.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
