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The Markets gave a massive reaction to the deferment of QE tapering and in anticipation of some positive steps by RBI's Credit Policy to be announced  today, ended the day on a massive gains of 216.10 points or 3.66%. For today, expect the Markets to open on a modestly negative note and see some consolidation or some imminent profit taking from higher levels.

The Markets, will get overbought with a positive start and it would extremely unhealthy for the Markets to continue after the kindly of up move it witnessed yesterday. Further to this, the Markets are expected to trade in a capped range in the morning session and would start reacting to the Credit Policy once it is announced after 11 AM.

The RSI--Relative Strength Index on the Daily Chart is 69.05 and it has reached its highest value in last 14-days. The Daily MACD continues to trade comfortably above its signal line.

On the derivative front, NIFTY September futures have added over 5.42 lakh shares or 3.46% in Open Interest and this indicates some longs being created afresh.

Given the above reading, all lead indicators and F&O data suggest that the Markets shall continue with its up move.However, given the pattern analysis, it would be healthy if the Markets sees some correction / profit taking from higher levels. Further to this, any up move shall make the Markets overbought and  therefore make some consolidation / profit taking imminent.

All and all, it is advised to refrain from any aggressive participation in the Markets. Any profits on the long positions should be very vigilantly protected. Fresh positions should be taken on extremely selective basis. Overall, some consolidation / minor profit taking is imminent and can be expected any time even if the Markets give knee-jerk reactions to the RBI Announcements.
Milan Vaishnav,
Consulting Technical Analyst,