MARKET REPORT March
11, 2014
The Markets continued to inch upwards for the fifth day in a
row as it registered moderate gains yesterday while continuing to remain in
“overbought” territory. The Markets opened on a flat note showing much resilience
to the Asian weakness and traded with much capped range in the early minutes of
the trade. After opening flat, the markets momentarily dipped in the negative
territory in the early morning trade while it registered its day’s low of
6487.35. It continued to trade in the negative territory until the afternoon
trade but traded with very limited losses. In the second half of the session,
the Markets moved in the positive territory on back of some more buying by the
FIIs and moved towards giving the day’s high of 6562.20 in the late afternoon
trade. The Markets came off a bit from those levels and finally ended the day
at 6537.25, posting a modest gain of 10.60 points or 0.16% while continuing to
form a higher top and higher bottom on the Daily High Low Charts.
MARKET TREND FOR TODAY
The Markets has showed first signs of weariness at higher
levels yesterday though it continued to end the day with modest gains. This
tends to happen and Markets tend to remain “overbought” for some time during
such up moves. For today, expect the Markets to open on a flat and quiet note
and look for directions again. The intraday trajectory that the Markets forms
would be critically important today and there are bright chances that the
Markets continue with its consolidation at higher levels.
For today, the levels of 6560 and 6585 would act as
immediate resistance for the Markets. The supports exist at 6485 and 6450
levels.
The RSI—Relative Strength Index on the Daily Chart is
75.0965 and it has reached its highest value in last 14-days which is bullish.
However, it continues to grossly remain in “overbought” territory. It does not
show any bullish or bearish divergence. The Daily MACD continues to remain
bullish as it trades above its signal line.
On the derivative front, the NIFTY March futures open
interest has remained unchanged as it has just added nearly 60,450 shares or
0.33% in open interest. This shows that there was no major buying seen
yesterday, over all on net basis and no major unwinding was seen as well. This
implies that there was churning of portfolio seen in the Markets yesterday.
Going by the pattern analysis, the Markets clearly continues
to remain grossly “overbought”. Given this, with every move on the upside, the
Markets are more likely to see some consolidation or minor profit taking from
higher levels. The consolidation / mild profit taking in the Markets is now
almost imminent and it would be in fact healthy for the Markets to strengthen
its base again for sustainable up moves. However, it does happen the Markets
continue to remain in such “overbought” territory for some time in case of
liquidity driven rallies.
All and all, the Markets are overbought and this certainly
warrants some discretion in making fresh purchases. It is continued to be
advised, as we have mentioned in our previous edition of Daily Market Trend
Guide as well that profits now need to be protected at higher levels. Also,
blanked buying should be avoided. It is time to adopt highly stock specific
approach and any downsides / consolidation should be used to make fresh
purchases. Overall, cautious outlook with controlled exposure is advised for
today.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
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