MARKET REPORT May
02, 2014
They Markets ended in red for the fourth day in a row on
Wednesday after a volatile session. The Markets opened on a positive note and
in the morning trade it moved in upward rising trajectory on a relatively
stronger note while it formed its intraday high of 6780.15. It maintained its
gains until afternoon trade and when it just seemed that the Markets may have a
rebound, weakness crept into the Markets. The Markets gradually pared nearly
all of it s gains to trade flat. Further in the late afternoon trade, the
Markets weakened further as it came off over 120-odd points from its day’ high
and form the intraday low of 6656.80. It did see some minor recovery in the end
but finally ended the day at 6696.40, posting a net loss of 18.85 points or
0.28% while forming a similar top but sharply lower bottom on the Daily High
Low Charts.
MARKET TREND FOR TODAY
Today, the Markets shall open after a trading holiday
yesterday. We might see a modestly positive opening in the Markets today but
there are fair amount of chances that the Markets may continue to witness
corrective activities. The positive trade may not be ruled out initially and
the Markets may continue to see some short covering in the initial trade but
the correction is likely to continue for immediate short term.
For today, the levels of 6730 and 6775 would act as
immediate resistance for the Markets. The supports exist at 6650 and 6610
levels.
The lead indicators continue to show weariness on the Daily
Charts. The RSI—Relative Strength Index on the Daily Chart is 51.7534 and it
has reached its lowest value in last 14-days which is Bearish. Further to this,
the RSI has set a new 14-period low but NIFTY has not yet and this is clear
Bearish Divergence. The Daily MACD too is bearish as it trades below its signal
line.
On the derivative front, the NIFTY May futures have added a
nominal 53,050 shares or 0.41% in Open Interest. This can be interpreted as
though there has been no major offloading seen at the end of the day, there was
no short covering as well from the lows of the day on Wednesday.
Going by the pattern analysis, the Markets have formed an
immediate top and has corrected since then in the last four trading sessions.
Though it may not continue to correct on similar lines, it will overall more
likely to correct after showing a gain for a day or so. This reading continues
to remain supported by F&O data and the lead indicators as well.
All and all, today we might see a modestly positive opening today
and gains might be seen in the initial trade but there are chances that the
Markets continue with its corrective activities after a minor technical
pullback. With such reading, we continue to advice to vigilantly protect
profits on positions and remain moderate on overall exposure. Very selective
purchases may be make at lower levels. Overall, continuance of cautious
approach is advised for today.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
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