Tuesday, April 22, 2014

Daily Market Trend Guide -- Tuesday, April 22, 2014

MARKET REPORT                                                                                      April 22, 2014
The Markets displayed a similar pattern in yesterday’s trade as well as it spent the most part of the session in a very narrow and ranged movement but saw spurt led by short covering to end the day with gains. The Markets opened on a modestly positive and quiet note and it spent the most part of the session in a very narrow 20-odd points range. After trading in sideward trajectory until late afternoon trade, the Markets saw a sharp up move in last hour and half of the trade as it went on to form the day’s high of 6825.45. The Markets came off a bit from those levels and finally ended the day at 6817.65, posting a net gain of 38.25 points or 0.56% while forming a higher top and higher bottom on the Daily High Low Charts.


MARKET TREND FOR TODAY

Markets  gave a fresh closing high yesterday and today, we are again set to see a mildly positive and quiet opening. Apart from global cues, we enter the penultimate day of expiry of current derivative series and therefore, the session is certainly set to remain dominated with rollover centric activities. The Markets may attempt to give a fresh break out on the upside but the sustainability of that breakout would be in question and the Markets may continue to remain in consolidation stage for some more time.

For today, the Markets might trade in uncharted territory with likely resistance at 6830 and 6855 levels. Supports exist much lower at 6770 and 6710 levels.

The lead indicators show some lack of strength required for the breakout. The RSI—Relative Strength Index on the Daily Chart is 68.3965 and it does not show any failure swings. However, NIFTY has reached its highest level in last 14-period whereas the RSI has not and this is a clear Bearish Divergence. The Daily MACD continues to remain bearish as it trades below its signal line. 

On the derivative front, the NIFTY has shed total of 10.60 lakh shares in total open interest. This is once again a clear indication that the Markets have shown heavy short covering from the current levels as no major purchases were witnessed. Further to this, total NIFTY and market wide rollovers too have remained below its 3 month average.

Going by the pattern analysis, the Markets are yet to give a clear breakout on the upside. However, again with any fresh breakout on the upside, the Markets will again turn “overbought” and also, the F&O data suggests that the Markets may not achieve fresh break out and if at all it achieves, it can be little less sustainable. 

All and all, we still continue to advise to refrain from creating excessive exposure in the Markets. While avoiding shorts, exposure should be kept moderate and any downside should be used in making very selective purchases. Overall, mild positions with moderate caution is advised for today.

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



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