MARKET REPORT April
16, 2014
The Markets continued to correct yesterday very much on
expected lines as it continued to end the day with losses. The dent would have
been even bigger if the IT stocks would not have out performed the Markets. The
Markets opened on a positive note and soon formed its intraday high of 6813.40
in the first seconds of the trade. The Markets immediate dipped into the
negative territory after that and remained negative for the rest of the
session. Almost entire session was spent in a sideward trajectory with no
attempt of any pullback. The Markets went on to record its intraday low of
6711.75 in the later afternoon trade. It finally ended the day at 6733.10,
posting a net loss of 43.20 points or 0.64% while forming a higher top but
lower bottom on the Daily High Low Charts.
MARKET TREND FOR TODAY
The Markets had all the reasons to cry foul yesterday like
rise of CPI, WPI inflation and therefore no hopes for a rate cut in near
future. However, the reason was also the technical structure of the Markets
wherein the correction was long pending and imminent. Today as well, expect the
Markets to open on a flat and quiet note but there are absolutely all chances
that the Markets would continue with their corrective activities. IT sector
would continue to remain in lime light with TCS coming out with its numbers.
For today, the levels of 6370 and 6390 would act as
immediate resistance for the Markets. The supports exist lower at 6690 and 6620
levels.
The lead indicators continue show signs of tiredness
creeping in the Markets. The RSI—Relative Strength Index on the Daily Chart is
65.9633 and it has just moved out of the “overbought” territory which is a
bearish sign. The RSI has also reached its lowest levels in last 14-days which
is bearish. Further to this, the RSI has set a new 14-period low while NIFTY
has not yet and this is Bearish Divergence as well. The Daily MACD too is
bearish as it reported a negative crossover as predicted yesterday. On the
Candles, and engulfing bearish line has occurred. The engulfing
bearish pattern is bearish if it occurs during an uptrend. It signifies
shifting of momentum from bulls to bears. However, this needs an confirmation.
On the derivative front, the NIFTY April futures have shed
over 7.64 lakh shares or 4.75% in Open Interest. This continues to signify
clear offloading of long positions and profit booking.
Going by the pattern analysis, the Markets have failed to
successfully surpass its previous high of 6776 and did not break out above
that. It has corrected from those levels while remaining in overbought
territory. It is very much likely that this correction continues as very
clearly suggested by the lead indicators and is also further supported by
F&O data. Any upswings that we would witness would be because of short
covering.
Overall, the corrective sentiment in the Markets is likely to
continue. Any up move would be sharp short covering from the lower levels. It
is reiterated that one should remain away from creating excessive exposure in
the Markets. Moderate exposures should be maintained while remaining very much
selective on purchases. Overall, cautious outlook is advised for today.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
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