MARKET REPORT
October 21, 2013
The Markets had an extremely buoyant session on Friday as
the Markets opened on a positive note and remained in positive rising
trajectory for the entire session as it closed the day with robust gains. The
rally was primarily fuelled by fresh purchases on the hopes that the Federal
liquidity tapering shall not occur following US Government shutdown impasse. After
opening on a positive note, the Markets, throughout the session kept giving new
intraday highs as it continued to inch upwards steadily. Towards the end, it
went on to give the day’s high of 6201.45 and finally ended the day at 6189.35,
posting a robust gain of 143.50 points or 2.37% while forming a sharply higher
top and bottom on the Daily High Low Charts.
MARKET TREND FOR TODAY
The Markets have moved past the critical resistance zone of
6130-6150. Today as well, they are likely to open on a mildly positive to flat
note. Any positive opening would take the Markets to its very major resistance
level of 6220-6235 zone. It is very likely that the Markets see some profit
booking from these levels.
For today, the levels of 6210 and 6130 would act as major
resistance levels for the Markets. The supports exist at 6130 and 6055 levels.
The RSI—Relative Strength Index on the Daily Chart is
67.1580 and it has reached its highest value in last 14-days which is bullish.
It does not show any kind of bullish or bearish divergence. The Daily MACD
continues to remain bullish as it trades above its signal line.
On the derivative front, NIFTY October futures have shed
over 4.17 lakh shares or 2.17% in Open Interest. This shows that some amount of
shedding of open positions, or some profit booking has been witnessed at higher
levels.
Given the pattern analysis on the Daily Charts, it is likely
that the Markets open positive but that opening would cause the Markets to open
near its very important and major resistance levels of 6220-6230 levels. The likelihood
of the Markets seeing some consolidation / profit taking from these levels is
more because if the Markets go ahead and breach these levels as well, it would
turn overbought and the rise would get somewhat unhealthy. Even if the lead
indicators are analysed, they shows the chances of some bearish divergences occurring
in the next few sessions to come.
Overall, given the above reading, there are chances that the
Markets see some amount of profit taking from higher levels. If the Markets
continue with its up move, the rise would get little unhealthy and we would
advise retail investors to refrain from any aggressive buying and continue to
protect profits on existing positions at higher levels. Overall, positive
caution is advised for today.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
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