MARKET REPORT August
18, 2014
The Markets had a
stable and buoyant session on Friday as it opened into the positive territory,
remained positive throughout the session and ended the day with decent gains.
The Markets opened on a positive note following favorable cues and traded in
20-odd points range in sideways trajectory while comfortably maintaining
opening gains. There was no pressure witnessed on the Markets as it remained
quite stable on modest volumes. The second half of the session saw some more
strength coming in as the Markets inched up further breaking the sideways
trajectory. It went on to form the day’s high of 7796.70 in the late afternoon
trade. It came off a bit from those levels but overall maintained the gains. It
finally ended the day at 7791.70, posting a net gain of 52.15 points or 0.67%
while continuing to form a higher top and higher bottom on the Bar Charts.
MARKET TREND FOR TODAY
Today’s session is likely to remain quite critical for the
Markets. The Markets are likely to open on a flat or modestly negative note and
look for directions. It seems that the Markets may take some breather from the
pullback that it has been witnessing over last couple of days. At the same
time, it is seen making complex formations on the Charts which can see it swing
either way.
The levels of 7820 and 7855 would act as immediate
resistance for the Markets on the Daily Charts. The supports come in at 7740
and 7695 levels.
The RSI—Relative Strength Index on the Daily Chart is
58.3019 and it does not show any failure swings. However, the NIFTY has set a
new 14-day high but RSI has not and this is Bearish Divergence. The Daily MACD
continues to remain bearish while trading below its signal line. On the Weekly
Charts, though we had a short week this time, the Weekly RSI stands at 67.5170
and this too shows a clear Bearish Divergence as the Weekly NIFTY has set a new
high but Weekly RSI has not. The Weekly MACD, however, continues to trade
bullish above its signal line.
On the derivative front, NIFTY August futures have added
over 2.59 lakh shares or 1.83% in Open Interest. The NIFTY PCR stands at 0.99
as against 0.94 the previous day.
Looking at the structure of the Chart, the Daily Chart is
seen making some complex patterns. While the NIFTY continues to remain in a
large Broadening Formation, it is also seen making a small ascending triangle
in between that. However, the overall broadening formation looks more
dominating on both the Daily as well as Weekly Charts, some sharp movements
cannot be ruled out but the overall bias / caution still continues towards some impending correction
in the Markets.
Overall, keeping in view the above structure of the Chart,
which is read along with lead indicators, the bias still remains tilted towards
some more consolidation or some correction with only mild chances of some more
up move. Even if the Markets show some up move, it would not be out of the
broadening formation at higher levels. Given this, it is still advised to adopt
highly stock specific and selective approach while maintaining caution in the
Markets.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
