MARKET REPORT May
19, 2014
Markets showed a massive upsurge on Friday as the election
results started coming out. Markets opened on a positive note and Friday and as
the initial trend very nearly clear, it showed a massive uptick as the NIFTY
went on to touch a record high of 7563.50. However, post this euphoria the
Markets started to witness some profit taking from these highest levels. The
Markets, for the rest of the day, remained in falling channel in downward
trajectory. It started pared its gains since late morning trade and went on to
shed nearly 350+ points NIFTY from its intraday high. It still managed to end
the day with decent gains at 7203, posting a net gain of 79.85 points or 1.12%
while forming a steeply higher top and higher bottom on the Daily High Low
Charts.
MARKET TREND FOR TODAY
Today, expect the Markets to open on a positive note but at
the same time volatility shall remain and there are fair chances that we
continue to see some consolidation or some profit taking at these levels with
the levels of 7563 acting as a top. The Markets will continue to see volatile
movements at either side and the range of this volatility is expected to be
wider with profit taking expected with every higher level.
For today, the levels of 7260 and 7305 are expected to act
as immediate resistance levels for the Markets. The supports exist much lower
at 7105 and 6920 levels.
The RSI—Relative Strength Index on the Daily Chart is
79.6769 and it has reached its highest value in last 14-days which is bullish.
However it continues to trade “deeply overbought” and it does not show any
bullish or bearish divergences. The Daily MACD remains bullish as it trades
above its signal line. On the Candles, a Long Upper Shadow occurred. This
is typically bearish and suggest a creation of top for the Markets when it
occurs near a high price levels and when the security is “overbought”, which is
certainly a case with NIFTY.
On the derivative front, the NIFTY has added over
36.52 lakh shares or 20.19 in net Open Interest. This has two readings. The one
is that there is likelihood of fresh longs in the system. However other major
likelihood is that the Markets have seen huge creation of shorts in the Market
as bulk of this Open Interest has been created while the Markets came off
nearly 350-odd points NIFTY.
Going by the pattern analysis, there has been a massive
higher top and higher bottom for the Markets that has been formed in Friday’s
session. Such tops, when they occur, generally form a top for the Markets and
the Market either corrects from these levels or very severely consolidates in a
volatile manner.
All and all, we can still see a positive opening in the
Markets but at the same time we can expect volatility to persist. Given the
total gains of nearly 600+ points of NIFTY at Close levels some consolidation
of profit taking just cannot be ruled out. Every such gain should be utilized
to book profits in long positions. Even with some profit taking it would be still
be a consolidating market and therefore fresh shorts should be avoided. While
continuing to remain moderate on the overall exposure, high degree of caution
is continued to be advised for today.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.