MARKET REPORT September
12, 2014
In a volatile session on Friday, the Markets barely managed
itself from returning back into the trading range as the last hour up move
helped it to end the day with modest gains. The Markets opened on a positive
note but after briefly trading in to the positive it slipped into the red. The trading range of the Markets continued to
remain very much capped as it pared its little recovery again to trade in red
and form the day’s low of 8071.60. Just when it appeared that the Markets may
return back into its trading zone, the last hour and half of trade saw the
Markets seeing a sharp short covering from lower levels. It went back into the
green and went on to form the day’s high of 8114.30. It finally managed to end the
day at 8105.50, posting a net gain of 19.80 points or 0.24% while forming
nearly a parallel bar on the Daily Bar Charts.
MARKET TREND FOR MONDAY, SEPTEMBER 15, 2014
IIP Numbers that came in on Friday were worse than expected.
Further to this, with the technical factors too remaining not much in favour of
the Markets, there are chances that the Markets may react to this in tomorrow’s
opening. There are chances that we may see little negative opening and the
Markets initially trades in capped range.
With the upper trend line rising, the Markets will now have to trade at
levels 8120 and higher in order to avoid any weakness.
The levels of 8120 and 8160 would act as resistance. The
supports come in lower at 8035 and 7980 levels.
The RSI—Relative Strength Index on the Daily Chart is
65.3953 and it remains neutral as it shows no bullish or bearish divergences or
any failure swing. The Daily MACD remains above its signal line but continue to
show its likely negative crossover in coming sessions. On Weekly Charts, the
Weekly RSI is 72.7477 and it remains in “overbought” zone. Further, though it
does not show any failure swing, the NIFTY has formed a fresh Weekly high
whereas Weekly RSI has not. This is clear Bearish Divergence on the Weekly
Charts. Weekly MACD trades above its signal line.
On the Derivative front, the NIFTY September futures have shed
over 2.34 lakh shares or 1.69% in Open Interest. This clearly shows that the NIFTY
has seen unwinding of open positions and the rise that we saw in last hour of
the trade was clearly because of short covering and not because of fresh buying
at lower levels.
Coming to the pattern
and trend analysis, the Markets have attempted to breakout of the rising
trend line shown. However, while it has not comprehensively done so, it lies
critically on the line and any close below 8100 would bring in more weakness in
the Markets. In other words, it would be critically important for the Markets
to trade above 8120 and higher with each passing day to avoid any short term
correction setting in.
Overall, with the overall structure of the Charts, the
Markets show all ingredients of some correction setting in. This gets further
supported by the pattern analysis and the still further by F&O data. This
leads us to reiterate that the up moves should be utilized to protect profits
at higher levels and all fresh purchases should be kept limited to non index
and stock specific components.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
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