MARKET REPORT July
01, 2014
Completely defying all technical indicators the Markets
yesterday staged a smart recovery, though on lower volumes and ended the day
with decent gains. The Markets opened on a strong and positive note and in the
initial trade itself it managed to achieve smart gains. These gains were
maintained all throughout the session. After opening strong and getting
stronger, the Markets then spent most of the session until the late afternoon
trade by trading in a sideways trajectory while strongly maintaining those
gains. In the final hours, the Markets got little stronger as it went on to
form a day’s high of 7623.65. It came of a bit form those levels but ended the day
at 7611.35, posting a very decent gain of 102.55 points or 1.37% while forming
a sharply higher top and higher bottom on the Daily High Low Charts.
MARKET TREND FOR TODAY
The Markets have risen yesterday in gross defiance of all readable
technical indicators. Today as well, we can fairly expect the Markets to open
on a modestly positive note and look for directions. Since the Markets are
trading in total defiance of technical indicators, we continue to term it “unhealthy”
especially given the speculative behaviour that is being observed since last
couple of session.
For today, the Markets have resistance levels of 7665 and
7700 and supports exist at 7510-7500 levels.
The lead indicators paint a neutral to mildly bearish
picture on the Daily Charts. The RSI—Relative Strength Index on the Daily Chart
is 62.3454 and it does not show any bullish or bearish divergence or any kind
of failure swing and is therefore neutral. The Daily MACD continues to remain
bearish as it trades below its signal line.
On the derivative front, the NIFTY July futures have shed a
nominal 78,150 shares or 0.56% in Open Interest. This is little interesting as
with such a rally yesterday, there has been no addition of long positions at
all on one hand and also no significant shedding / unwinding of positions on
the other hand as very nominal decrease of Open Interest is observed.
Going by the pattern analysis, one thing remains clear that though
the Markets have managed to keep its head above the short term support of
7500-7510 levels, it is unlikely to give a further breakout on the Daily
Charts. The reason behind this is the lead indicators paint a neutral to mildly
bearish picture on the Daily Charts and the Weekly lead indicators clearly
remain “overbought” on the Weekly Charts. This may cause the Markets to remain
in a broad trading range for some more time.
Given the above reading, we would continue to advice on the similar
lines that we have been advising since couple of sessions. Overall exposures in
the Markets should be curtailed and over leverage should be avoided. Any
purchases to be made should be done extremely selectively and should be very
stock specific an defensive. Overall, continuance of cautious approach is
advised for today.
Milan Vaishnav,
Consulting
Technical Analyst,
+91-98250-16331
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