Wednesday, March 26, 2014

Daily Market Trend Guide -- Wednesday, March 26, 2014



MARKET REPORT                                                                                       March 26, 2014

The Markets had a volatile and range bound consolidation session yesterday wherein it moved in either direction of its previous Close and finally ended the day with minor gains. The Markets opened on a negative note and soon formed its intraday low of 6544.85 in the very early minutes of the trade. Thereafter, the Markets soon recovered to trade flat. The Markets spent the first half of the session in a narrow range with capped losses paring grounds and recovering it again. The second half of the session saw a sharp movement as the Markets spurted on the upside only to see paring of those gains. The last hour of the trade once again saw strength in the Markets as the Markets went back in the positive territory to form the day’s high of 6595.55. It finally ended the day at 6589.75, posting a minor gain of 6.25 points or 0.09% forming a slightly higher top and higher bottom on the Daily High Low Charts.




MARKET TREND FOR TO DAY


Even with the Markets remaining in “overbought” territory, it saw positive consolidation yesterday without showing much weakness even at higher levels.  Today, expect the Markets to open on a positive note and continue with its up move in the initial trade.  However, the second half of the session is likely to see some consolidation or mild profit taking from higher levels. We enter the penultimate day of expiry of current series and the session is also likely to remain dominated with rollover centric activities.


Today, the levels of 6595 and 6630 would act as immediate resistance for the Markets. The supports exist at 6550 and 6510 levels.


The lead indicators continue to remain in “overbought” territory. The RSI—Relative Strength Index on the Daily Chart is 72.5163 and it does not show any failures wings. However, it trades in the overbought territory and the NIFTY has formed a new 14-period high but RSI has not. This is Bearish Divergence as well. The Daily MACD continues to trade above its signal line.


As evident from the Daily Charts, the Markets have not completely broken out on the upside but it has certainly attempted to move out of the trading band of 6415-6575 levels. However, though there is a distinct possibility of a breakout on the Daily Charts, the  Markets would not see a run-away rise as the lead indicators remain overbought. This would either make the Markets remain in consolidation for some more time or make the further up move little less sustainable and risky.


All and all, the Markets would see a positive opening but at the same time it is likely to remain ingrained with volatility due to rollovers. Further, there are also chances that the Markets would see some consolidation or mild profit taking at higher levels. Given this reading, it is strongly advised that more emphasis should be given to protection of profits at higher levels rather than making new purchases. Also, any dip from higher levels should be utilized to make fresh purchases while strictly avoiding shorts. Overall, neutral outlook is advised for today.


Milan Vaishnav,

Consulting Technical Analyst,



+91-98250-16331








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