MARKET REPORT June
09, 2014
Despite being overbought, the Markets continued its
relentless upsurge and ended yet another day at fresh highs on Friday. The
Markets opened on a positive note and traded with capped gains in the first
half of the trade. While it maintained its gains in the first half with no
selling pressure seen, it saw itself strengthening further in the second half.
The Markets continued to surge ahead in the second half while gradually making
fresh highs. It went on to form the day’s high of 7592.70 towards the end of
the session. The Markets hovered around those levels and with no pressure seen
even around these highs, it finally managed to end the day at 7583.40, posting
yet another decent gain of 109.30 points or 1.46% while making a higher top and
higher bottom on the Daily High Low Charts.
MARKET TREND FOR TODAY
As evident from the Daily Charts, the Markets have given a
positive breakout on the Close Charts, and today, as further evident from the
bar charts, it would attempt to give a positive breakout on the Daily High Low
Charts. Today, expect the Markets to open on a positive note and trade in
uncharted territory. Though positive opening expected today, from today
onwards, there would be very high degree of chances that the Markets comes off
later as we go ahead in the session. While remaining “overbought”, correction
at any given point of time is very much impending.
Today, the levels of 7615 and 7640 might act as immediate resistance.
The supports would be much lower at 7505 and 7455 levels.
The lead indicators continue to point towards correction at
any moment. The RSI—Relative Strength Index on the Daily Chart is 78.6190. It
does not show any failure swings. However, importantly, the NIFTY has made a
new 14-period high but RSI has not and this is, once gain, a clear Bearish
Divergence. Further, it also trades in the “Overbought” territory. The Daily
MACD continues to trade above its signal line.
On the derivative front, NIFTY June futures have shed over
1.08 lakh shares or 0.77% in Open Interest. This is a nominal shedding of open
interest, but at this juncture, we would like to point out that in previous 3-4
sessions of relentless up move, the Markets have ended up shedding significant
amount of open interest.
Going by the pattern analysis, the Markets have already
achieved a breakout on the upside on the Close Charts. Today, with positive
opening, it would attempt a breakout on the Daily High Low Charts as well.
However, as we have been reiterating in our previous editions of the Daily
Market Trend Guide, the Markets have been trading heavily “overbought”. Therefore,
even with the positive opening today, there would always be a high amount of
chances that the Markets sees a temporary sharp downside, even if it is for a
very short term.
Going by this, we continue to very strongly reiterate to
refrain from fresh buying and over leveraging in the Markets. Buying should be
only in defensives and that too on ultra selective basis and profits should be
protected very vigilantly on either side. The Markets are rising but any sharp
correction, if not today, then in coming days just cannot be ruled out.
Overall, while maintaining liquidity, extremely high degree of caution is
advised for today.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
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