MARKET REPORT May
20, 2014
The Markets witnessed a volatile session yesterday and swung
nearly 98-odd points on either side but ultimately ended yet another day with
gains despite being in miserably overbought condition. The Markets opened on a
positive note and soon formed its intraday high of 7291.10 in the early minutes
of the trade. However, the Markets pared all of its gains in the morning
session as it gradually came off and in the afternoon trade even dipped briefly
into the negative territory while forming the day’s low of 7193.55. The second
half of the session saw the Markets recovering again and slowly recovered most
of its losses again. It finally ended the day at 7263.55, posting a net gain of
60.55 or 0.84% while forming a sharply lower top but higher bottom on the Daily
High Low Charts.
MARKET TREND FOR TODAY
Today’s analysis for the Markets remain more or less on
similar lines that of yesterday. The Markets are now trading in “extremely overbought”
condition. The Markets are likely to open on a modestly positive note and see
some up tick in the initial trade but there are great chances that the
volatility shall persist and the Markets continue to see consolidation or
imminent profit taking.
For today, the levels of 7295 and 7330 would act as
immediate resistance levels. The supports exist far lower at 7210 and 7125
levels.
The RSI—Relative Strength on the Daily Chart is 81.1506 and
it has reached its highest value in last 14-period which is bullish. However,
it does not show any bullish or bearish divergence and it continues to remain
in “extremely overbought condition”. The Daily MACD continues to trade above
its signal line.
On the derivative front, NIFTY May futures have added 3.52 lakh
shares or 1.64% in total open interest. This signifies that no major offloading
was seen. Minor fresh longs might have been added. NIFTY PCR rose from 0.69 to
0.72 yesterday.
Going by pattern analysis, the Markets have formed a top of
7563 on 16th of May and until this is breached on the up side the
Markets will not have a break out. However, having said this, the range for the
Markets would be much broader and wider while it consolidates .So, even if it
consolidates, it would do so in a wide range and this would make this
consolidation quite volatile. Also if some profit taking happens, it would be
little healthy for the Markets.
All and all, the Markets are now at dizzying levels and
since liquidity is pushing it, it generally tends to disregard the technical
factors. However, we would not advice to take any blanket long positions at
these levels. Any purchases, if any, should be making in the defensives. Also
while continuing to over leverage and take extended exposures, it should be kept
moderate while continuing to maintain extreme caution in the Markets.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
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