MARKET REPORT June
13, 2014
The Markets consolidated once again in a sideways trajectory
on the Daily Charts as it traded in a much capped range and ended the day with
modest gains on relatively low volumes. The Markets opened on a flat note and
soon dipped into the red in the very early minutes of the trade to form the day’s
low of 7593.80. However, it soon recovered from those morning lows to trade
back into the positive territory. Since then, until the end of the session, the
Markets continued to trade in a very narrow 20-odd points range in sideways
trajectory while completely lacking any directional bias. In the last hour of
the trade, it did see some volatility as it pared all of its gains to trade
flat. But the Markets recovered again from those lows to touch the day’s high
of 7658. After trading near this level,
it finally ended the day at 7649.90, posting a minor gain of 23.05 points or
.30% while forming a lower top but similar bottom on the Daily High Low Charts.
MARKET TREND FOR TODAY
The Markets will see a test from both side as it is likely
to react to some domestic as well as global news flow while remaining “overbought”
on the Daily Charts and heavily prone to corrective movements. There are minor
good news on the IIP figures as well as CPI numbers and on the other hand,
there is some air of caution in wake of Iraq events. However, given everything,
the Markets remain “overbought” and technically prone to correction setting in.
For today, the levels of 7700 and 7730 would act as likely
resistance levels. The supports exist at 7570 and 7520 levels on the downside.
The lead indicators continue to paint a weary picture. The
RSI—Relative Strength Index on the Daily Chart is 77.9962 and it is neutral as
it shows no bullish or bearish divergences or any kind of failure swing.
However, it continues to trade in “overbought” territory. The Daily MACD
continues to trade above its signal line.
On the derivative front, the NIFTY June futures have added
over 6.07 lakh shares in Open Interest. The NIFTY PCR stands at 0.88 as against
0.86 on the previous day.
Going by the pattern analysis, as we had pointed out
yesterday, the levels of 7700 has now become immediate top for the Markets. Any
fresh up move shall occur only after the Markets move past this level. However,
given the “overbought” condition on the Daily Charts, any such up move will
have very questionable sustainability and would remain prone to equally sharp
corrective movement.
Going by this, we now very strictly advice to reduce buying
at these levels. There are chances that the Markets opens on a positive note
and strengthens as we go ahead in the session. But there are equal chances that
the Markets see corrective pressure in the second half. We have global events
to speak of, but the technicals on the Daily Charts are enough reason for the
Markets to see any corrective movements. Therefore, while protecting profits on
the long positions on the upside, continuance of cautious approach is advised
for today.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
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