Friday, April 4, 2014

Daily Market Trend Guide -- Friday, April 04, 2014

MARKET REPORT                                                                            April 04, 2014
Markets showed first signs of correction setting in as it snapped a 10-day gaining streak to end the day in red, though after coming off from its day’s lows. The Markets opened on a flat to mildly positive note and soon formed its intraday high of 6776.75 in the early minutes of the trade. Thereafter the Markets dipped into the red and trading in the falling trajectory for the entire session. The Markets kept making fresh lows as it kept losing ground gradually. In the late afternoon trade the Markets went on to form the day’s low of 6696.90. However, last 30 minutes of the trade saw sharp recovery from lower levels as the Markets attempted to recover much of its losses. It finally ended the day at 6736.10, posting a modest loss of 16.45 points or 0.24% while forming a higher top but lower bottom on the Daily High Low Charts.


MARKET TREND FOR TODAY

Though the Markets ended yesterday with just nominal losses, it has formed a potential top at 6776 and this would act as a immediate top for the Markets. The Markets are slated to open on a modestly negative note and continue with its corrective activities, at least in the initial trade. The intraday trajectory would be crucial but the overall trend is likely to remain in the corrective mode.

For today, the levels of 6776 would continue to act as immediate top for the Markets. No sustainable up move shall occur until the Markets moves past this level. The support exists at 6685 and 6610 levels.

The RSI—Relative Strength Index on the Daily Chart is 77.9767 and it is neutral as it shows no bullish or bearish divergence or any failure swings. However, it continues to trade in the extremely “overbought” territory. The Daily MACD continues to trade above it signal line.

On the derivative front, the NIFTY April futures have shown a minor shedding of over 1.28 lakh shares or 0.74% in Open Interest. This shows that some short covering was witnessed from lower levels in the last 30 minutes of the trade and there has been minor unwinding of positions. 

Going by the pattern analysis, the Markets continues to remain heavily in overbought territory. Also, the levels of 6776.75 has no become a immediate top for the Markets. Any sustainable up move shall occur only after the Markets move past this level.  Given the extent of the markets being “overbought”, if this happens too soon, it would be little unhealthy for the Markets.

All and all, while keeping our analysis on the same lines as previous two day, we continue to advise to keep protecting profits at higher levels. Some stock specific performance would be seen as sectoral churning happens but it is advised to not to remain over-leveraged in the Markets. While remaining moderate on the exposures, continuance of cautious outlook is advised for today.

Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331



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