MARKET REPORT July
08, 2014
The Markets continued to inch upwards to newer lifetime
highs as it opened positive, traded in a 30-point capped range and ended the
day with modest gains. After opening on a flat to mildly positive note, the
Markets maintained its initial gains but gradually drifted lower. It continued
to slip very mildly and by afternoon trade had pared most of its gains but
continued to trade in positive territory. Again, the second half of the session
saw some recovery coming in as the Markets formed its intraday high of 7792.
These levels were maintained as the Markets finally ended the day at 7787.15,
posting yet another modest gain of 35.55 points or 0.46% while forming a higher
top and higher bottom on the Daily High Low Charts. The volumes remained
slightly lower yesterday than the average.
MARKET TREND FOR TODAY
Expect the Markets to open once again on a mildly positive
note and look for directions. Quiet opening may be expected but for the rest of
the week, the Markets shall remain dominated with external events. We have
Railway Budget coming up today, Economic Survey tomorrow and Union Budget, the
day after. The Markets shall remain range bound and volatile and might see some
profit taking bouts as they remain “overbought” on both Daily and Weekly
Charts.
For today, the levels of 7790 and 7825 may act as resistance
levels. Supports exist much lower at 7700 and 7630 levels.
The RSI—Relative Strength Index on the Daily Chart is
70.5986 and it has reached its highest value in last 14-days which is bullish.
However, it now trades in “overbought” zone. The Daily MACD has reported a
positive crossover and now trades above its signal line.
On the derivative front, NIFTY July futures have added
83,400 shares or nominal 0.58% in Open Interest. This shows that there has been
no major additions / offloading of fresh
positions in yesterday’s session. Stock future shave shed nearly 1 Crore shares
in Open Interest yesterday.
If we look at pattern analysis, the Markets have formed what is known as ‘rising wedge’ on the Daily Charts. Such patterns normally
induce minor corrections from higher levels. Further the Markets continue to
trade “overbought” on both Daily as well as Weekly Charts as clearly evident
from the lead indicators.
Given the above reading, there is no possibility that the
Markets show a ‘run-away’ upward rise in immediate short term. If it does show
such sporadic rise, it would be due to external events that are lined up but
under these circumstances fresh open ended buying should be very strictly
avoided. Any sporadic rise would make the Markets unhealthy and make profit
taking bouts imminent and uncertain. Overall, while maintaining liquidity, very
moderate positions with cautious outlook should be taken for today.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
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