MARKET REPORT September
25, 2014
The Markets took a beating yesterday as it registered a
significant decline on a very high volume on the expiry day of September series
as it ended the day with a deep cut. Coal verdict and resultant negative
sentiments were to blame but technicals too remained much weaker as well. The
Markets opened on a flat note and formed its intraday high of 8019.30 in the
early minutes of the trade. Thereafter, for the rest of the session, the
Markets remained in falling channel and in falling trajectory. In the morning
trade itself, it slipped in the red and kept losing ground consistently. It
kept making lower lows intraday and continued to see selling pressure
throughout the session. This pressure intensified in the late afternoon trade
as the Markets nearly touched its 50-DMA while it formed the day’s low of 7877.35,
slipping nearly 140-points off its intraday high. Minor attempt to recover was
made in last minutes of the trade but the Markets finally settled at 7911.85,
posting a net loss of 90.55 points or 1.13% while forming a lower top and
sharply lower bottom on the Daily Bar Charts.
MARKET TREND FOR FRIDAY, SEPTEMBER 26, 2014
Technically speaking, the weakness in the Markets is likely
to persist, at least in the initial trade. Expect the Markets to open on a
lower note and look for directions. The Markets are expected to test its 50-DMA
of 7876 and the behaviour of the Markets vis-à-vis this level would be
crucially important. Any breach below this would put the Markets in
intermediate downtrend. Markets will have to trade above this level to see a
pullback, even if it is merely a technical pullback.
The levels of 7950, 7975 would act as immediate resistance
while the levels of 7876 and 7810 would act as immediate supports.
The RSI—Relative Strength Index on the Daily Chart is
44.3611 and it has reached its lowest value in last 14-days which is bearish.
However, it does not show any bullish or bearish divergence. The Daily MACD continues
to remain bearish while trading below its signal line.
On the derivative front, the October Series has seen NIFTY
Futures adding over 34.28 lakh shares or 27.76% in Open Interest. However, this
being also due to rollovers, the singular reading of this data may not be of
much significance. However, with the overall premium in the NIFTY Futures
declining, we have grounds to presume that some creation of short positions too
have taken place.
Returning to pattern analysis, in our previous editions of
Daily Market Trend Guide, we have been mentioning the Broadening Formation on
the Daily Charts. This formation has kept its significance as the Markets have
now confirmed the levels of 8180 as its immediate top. Now, it would be
necessary for the Markets to either consolidate or correct and form a different
area pattern before it attempts to move up again. The sustenance of the Markets
above its 50-DMA would be crucial in order to avoid entering into intermediate
downtrend.
Given this reading, the Markets are set for a lower opening
but there are mild chances that the Markets may put up some resilience post
opening while attempting to take support near 50-DMA. Bargain hunting may be
done, but only in select stocks while still keeping overall leverage under control
and maintaining adequate liquidity. Apart from mild bargain hunting, purchases
should be avoided while maintaining heavy caution in the Markets.
Milan Vaishnav,
Consulting Technical Analyst,
Af. Member: Market Technicians Association (MTA), USA
Af. Member: Association of Technical Market Analysts, INDIA
www.MyMoneyPlant.co.in
Af. Member: Market Technicians Association (MTA), USA
Af. Member: Association of Technical Market Analysts, INDIA
www.MyMoneyPlant.co.in
+91-98250-16331
