Thursday, April 3, 2014

Daily Market Trend Guide -- Thursday, April 03, 2014

MARKET REPORT                                                                                            April 03, 2014
The Markets continued to witness a typically “structured activity” as it has been witnessing over last couple of sessions as it opened modestly positive, remained in a ranged trade until the end and spurted in last hour of the trade to end the 10th day of straight gains. The Markets opened on a modestly positive note and after opening positive, until the late afternoon trade kept gradually paring ground. The Markets pared almost all of its gains to trade nearly flat by late afternoon trade. The last hour and half of the trade once again saw it sharply recovering as the Markets went on to post the day’s high of 6763.50. The Markets finally ended the day at 6752.55, posting yet another gain of 31.50 points or 0.47% while continuing to form a higher top and higher bottom on the Daily High Low Charts.


MARKET TREND FOR TODAY

The Markets are now very explicitly in extremely overbought condition and are almost being “rigged” but unabated cash flows. The Markets are once again slated to see a flat to modestly positive opening. However, given the current condition of the Markets, we strictly advise the retain investor not to get carried away in a frenzied buying and remain extremely stock specific. The Markets have all the ingredients of a long overdue and imminent correction.

The Markets continue to trade in uncharted territory. The levels of 6790 and 6820 might see some resistance on the upside. The supports exist much lower at 6680 and 6610 levels.

The lead indicators continue to remain extremely overbought. The RSI—Relative Strength Index on the Daily Chart is 81.1889 and it has reached its highest value in last 14-days. It continues to remain in “extremely overbought” condition and does not show any bullish or  bearish divergences. The Daily MACD continues to trade above its signal line. 

On the derivative front, the NIFTY April futures have added over 2.46 lakh shares or 1.45% in Open Interest showing addition in long positions.

Going by the pattern analysis, the Markets have now got into most unhealthy pattern given the parabolic rise that it has witnessed. It is overbought from all angles however, it continues to remain so backed by heavy cash inflows from the FIIs. However, so far as retail investors are concerned, it is important to note that the Markets are heavily overdue for an imminent correction as such rise, which is almost similar to “rigging” certainly has now got unhealthy. It might happen that whenever the FIIs are done with their activity and when the correction sets in, once gets badly caught at the extremely higher levels.

Overall, the analysis remains more or less on the similar lines that of yesterday. The Markets would open positive and at the same time, it would carry equal chances of showing much overdue correction. We continue to reiterate our advice to remain extremely stock specific while protecting profit at higher levels. Blanket buying should be avoided and high degree of caution is advised for today.

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


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