MARKET REPORT October
17, 2014
The Markets had a relatively better session yesterday as the
Markets showed recovery to end the day with modest gains with some signs of
stabilization in the weak global markets. The Markets opened on a mildly positive
note and contrary to the expectation, it dipped into the negative to form the
day’s low of 7723.85 in the late morning trade. However, it held on to the
support of 100-DMA levels, intraday, and attempted to pullback from those
levels. The Markets spent rest of the session in upward rising trajectory. It
recovered all of its morning losses and came back in the positive territory. It
went on to gradually form highs and thereby went on to register its intraday
high of 7819.20. Again, the levels of 7800-20 acted as resistance and the
Markets finally settled the day at 7779.70, posting a modest gain of 31.50
points or 0.41% while forming a lower top and similar bottom on the Daily Bar
Charts.
MARKET TREND FOR MONDAY, OCTOBER 20, 2014
Markets present little precarious picture on the Daily
Charts. Expect the Markets to open on a modestly positive note and it is
expected that the Markets would continue with its attempted recovery. Fact that
it took support nearly twice on its 100-DMA, pullbacks in the global markets,
outcome of Maharashtra and Haryana polls on expected lines, etc., would aid our
technical attempt of pullback. On the same lines, it would be very important
for the Markets to move past the 7800-20 levels in order to successfully post a
pullback.
The levels of 7800-20 and 7865 would act as resistance and
the supports would come in at 7742 and 7705 levels.
The RSI—Relative Strength Index on the Daily Chart is
39.8413 and it is neutral as it shows no bullish or bearish divergence or
failure swings. The Daily MACD remains bearish while trading below its signal
line. On the Weekly Charts, the Weekly RSI is 58.2240 and it has reached its
lowest value in last 14-weeks and this is bearish. Further, the Weekly RSI has
set a new 14-week low whereas NIFTY has not yet and this portrays Bearish
Divergence. The Weekly MACD continues to trade below its signal line.
On the derivative front, the NIFTY has added over 12.05 lakh
shares or 8.35% in Open Interest. This open interest addition is significant
and we can easily interpret that the Markets have added quite significant
amount of short positions and it is very much likely that in event of any
downside, the levels of 100-DMA are likely to continue to act as supports an
these short positions would also act out as supports.
Returning to pattern analysis, the Markets have done both –
taking support at its 100-DMA levels nearly twice and also continuing to resist
to 7800-20 zone, the support zone which it broke on the downside. Now these levels
would continue to act as resistance and it would be very important for the
Markets to move past these levels in order to pullback successfully. Failure to
do so will result into higher chances of the Markets returning towards its
100-DMA.
Going forward, it is advised to continue with positive
caution and approach the Markets accordingly. We might see some decline in
overall volumes due to festival season this week however, volatility is
certainly to stay in the Markets. Also reading the weekly charts, it is
unlikely that the Markets see a runaway rise. Any pullback will see the Markets
back in a trading range. While remaining low on overall exposure, positive
caution is advised.
Milan Vaishnav,
Consulting Technical Analyst,
Af. Member: Market Technicians Association (MTA), USA
Af. Member: Association of Technical Market Analysts, INDIA
www.MyMoneyPlant.co.in
Af. Member: Market Technicians Association (MTA), USA
Af. Member: Association of Technical Market Analysts, INDIA
www.MyMoneyPlant.co.in
+91-98250-16331
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