MARKET REPORT June
19, 2014
The Markets traded absolutely on the analysed lines
yesterday in our brief Market note as it not only remained volatile and swung
nearly 110-odd points on either side, but also ended the day with losses. The
Markets opened on a flat note with modest gains and traded in a capped range in
the morning trade. The Markets drifted on the upside and in the late morning
trade formed its day’s high of 7663. However, the Markets pared those gains by
afternoon to trade flat near its previous close. The second half of the session
saw a very sharp fall in the Markets as the Markets rapidly lost ground to
touch the day’s low of 7515.50, paring nearly 150-odd points from its day’s
high. It managed to recover most of its gains but last hour of the trade again
saw some selling pressure and the Markets finally ended the day at 7558.20,
posting a net loss of 73.50 points or 0.96% while forming almost a parallel bar
with slightly higher top and higher bottom on the Daily High Low Charts.
MARKET TREND FOR TODAY
Today’s analysis would remain on similar lines as the
Markets are expected to open with minor gains but the session is very much
likely to remain absolutely volatile with a corrective bias. The Markets may
open near its intraday resistance point and there are chances that it comes off
from day’s high as we go ahead in the session. Even if the gains are sustained,
the corrective bias would remain as suggested by technical factors and F&O
data.
For today, the levels of 7580 and 7625 would act as
immediate resistance for the Markets. The supports exists much lower at 7510
and 7435 levels.
The lead indicators continue to suggest corrective bias in
the Markets. The RSI—Relative Strength Index on the Daily Chart is 63.2951 and
it has just crossed below its overbought area from a topping formation. This is
bearish. Also, RSI has formed its lowest value in last 14-days which is bearish
as well. Further, the RSI has set a fresh 14-day low whereas NIFTY has not yet
and this is clear Bearish Divergence. The Daily MACD too remains bearish as it
trades below its signal line.
On the derivative front, the NIFTY June futures have
continued to shed over 6382 lakh shares or 4.61% in Open Interest. This is a
clear indication that the Markets have witnessed offloading from higher levels.
Going by the pattern analysis, the levels of 7700 continue
to remain a immediate top for the Markets. The Markets may correct or consolidate
in a broad range but sustainable up move shall occur only after it moves past
this level. Further with the range remaining wider than normal, this will also
induce volatility in the Markets. The bias remains towards some immediate
weakness as suggested by technical indicators and the F&O data as detailed
above.
All and all, under given circumstances, it is strongly
advised that any fresh purchases should not only be on highly selective basis,
but should be restricted to defensives and high beta stocks should be avoided.
It is continued to be advised that the overall exposure in the Markets should
be kept moderate. While protecting profits very vigilantly at higher levels,
cautious outlook is advised for today.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
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