MARKET REPORTB August 11, 2014
The Markets had a corrective session on Friday wherein it
saw a nearly gap down opening which weakened further as the Markets ended the
day with losses. The Markets saw a negative gap down opening and opened nearly
55-odd points lower than its previous close. The session saw the Markets moving
in a nearly 25-odd points range and it continued to drift lower and showed
virtually no signs of recovering. While trading in the 25-odd points after
opening gap down, the Markets formed its intraday low of 7540.10 in the late
afternoon trade. While continuing to remain below its 50-DMA post opening, the
Markets finally ended the day at 7568.55 after minor recovery with net loss of
80.70 points or 1.06% while forming a sharply lower top and lower bottom on the
Daily High Low Charts.
MARKET TREND FOR TODAY
Today, expect a positive opening in the Markets as the
Markets are expected to witness a technical pullback. The session is likely to
see positive opening and the Markets would trade positive at least in the
initial trade. Post opening it would be critically important to see if the
Markets capitalize on its positive opening. Its intraday trajectory and its behaviour
vis-à-vis the levels of 50-DMA would be crucial for coming days.
For today, the levels of 7610 and 7645 would act as
immediate resistance for the Markets. The supports exist at 7530 and 7480
levels.
The RSI—Relative Strength Index on the Daily Chart is
44.4964 and it has reached its lowest value in last 14-periods which is
bearish. However, it does not show any bullish or bearish divergences. The
Daily MACD remains bearish as it trades below its signal line. On the Weekly
charts as well, the RSI is 63.2534 and it has reached its lowest value in last
14-weeks which is bearish. Further, RSI has set a new 14-week low whereas NIFTY
has not yet and this is clear bearish divergence. The Weekly MACD however
trades above its signal line and its currently bullish.
On the derivative front, NIFTY August futures have shed over
8.89 lakh shares or 6.79% in Open Interest. The reduction in open interest
along with the fall clearly indicates unwinding of open long positions in the Markets.
Going by the pattern analysis, the Markets continues to
remain in overall reversal pattern. The Friday’s fall has seen a gap being
created which might get filled up in today’s positive trade. However, this
pattern, read along with lead indicators and further read along with F&O
data tilts the bias towards downside.
All and all, good stable positive opening is expected and we
might see a technical pullback rally to day, at least in the initial trade.
This up move should be utilized in protecting profits on existing positions and
fresh purchases should be made highly selectively. While protecting positions
at higher levels and maintaining moderate leverage, positive caution is advised
for today.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
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