MARKET REPORT April
21, 2014
The Markets on Thursday (Friday was a trading holiday on
account of Good Friday) saw a huge spate of short covering as it ended the day
with robust gains. The Markets opened on a modestly positive note and after briefly
trading in a capped range surged higher in the late morning trade. The Markets
once again continued to trade in sideward trajectory while maintaining those
gains. The late afternoon trade saw the Markets gaining further strength as it
surged even higher. It went on to post the day’s high of 6783.05 in the last
minutes of the trade. The Markets maintained those levels and finally ended the
day at 6779.40, posting a robust gain of 104.10 points or 1.56% while forming a
higher top and higher bottom on the Daily High Low Charts.
MARKET
TREND FOR TODAY
The Markets
shall open today after 3 days of slumber as it remained closed on Friday.
Today, expect the Markets to open on a very flat note and look for directions.
This week too is a truncated week with the Markets remaining closed on 24th
April due to voting for General Elections. Resultantly, the expiry shall happen
on Wednesday. Given the expiry week, and that too short and truncated, the
Markets would remain dominated with rollovers and there are bright chances that
it does not give a clear breakout on the up side.
For today,
the levels of 6825 and 6840 would act as immediate resistance levels for the
Markets. The supports exists much lower at 6720 and 6675 levels.
The RSI—Relative
Strength Index on the Daily Charts is 65.9687 and it is neutral as it shows no
bullish or bearish divergence or any failure swing. The Daily MACD continues to
remain bearish as it trades below it signal line.
On the
derivative front, the NIFTY April futures have shed over 4.44 lakh shares or
2.83% in Open Interest. This very clearly signifies that the Markets have seen
huge amount of short covering on Thursday. It needs to be seen if this gets
replaced with fresh buying. This is the factor that may prevent the Markets
from proceeding for a fresh breakout on the Daily Charts.
Going by
the pattern analysis, the Markets have not yet given a breakout on the upside
even after Thursday’s up move. There are chances that the markets deliberates
little more before it proceeds for a breakout. This reading is further
validated with the F&O data which shows across the board reduction in Open
Interest which very clearly indicates
that the rally that we saw on Thursday was more on account of short covering
and not on fresh buying. It would be critically important to see if this gets
replaced with fresh buying in the coming session.
All and all,
this week would remain cautious as the Markets would again see a truncated
week, with a expiry happening a day earlier. It is strongly advised that one
should refrain from fresh buying until a fresh and clear breakout is achieved.
Only selective and stock specific purchases should be made while avoiding
shorts. While remaining moderate on positions, cautious outlook is advised for
today.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
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