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Thursday, March 13, 2014

Daily Market Trend Guide -- Thursday, March 13, 2014

MARKET REPORT March 13, 2014

The Markets showed remarkable strength as it continued to severely consolidate while remaining in the overbought territory as it ended the day with minor gains after remaining volatile in a capped range. The Markets opened on a negative note and after trading flat for a while, soon drifted to lower levels to form the day’s low of 6487.30. However, the late morning trade saw the Markets showing a sharp rise as it move back in the positive territory and also formed it s intraday high of 6546.15. Thereafter, the Markets spent the entire session consolidating and moving in either direction. It pared those nominal morning gains and dipped into the red again. However, the Markets again saw some recovery and it finally ended the day at 6516.90, posting minor gains of 5 points or 0.08% while forming a slightly lower top and lower bottom on the Daily High Low Charts.

MARKET TREND FOR TODAY

Today, the Markets are expected to open on a modestly positive note and might attempt to move past its previous highs. Even after such stupendous rise, the Markets are showing no signs of weakening and this too stands supported by F&O data. The Markets would at the most consolidate with up ward bias and continue to attempt to gain strength for fresh upside.

Today, the levels of 6545 and 6570 would act as immediate resistance on the Daily Charts. The supports exist at 6480 and 6445 levels.

The lead indicators continue to remain in place. The RSI—Relative Strength Index on the Daily Chart is 72.2642 and it continues to trade in the overbought territory. It remains neutral as well as it shows no bullish or bearish divergences or failure swings. The Daily MACD remains bullish as it continues to trade above its signal line.

On the derivative front, NIFTY March futures have added 61,100 shares or 0.33% in Open Interest. This shows that even in this consolidation there has been no offloading observed, in fact, some minor addition of fresh longs is seen.

Going by the pattern analysis, the Markets are now consolidating after a sharp rise that we saw in the previous sessions. This consolidation has a very strong bullish undertone as the Markets are showing a Flag Formation on the Daily Charts. This is further supported by F&O data which have shown no offloading during this consolidation period.

All and all, the Markets are likely to continue to consolidate and do so with a strong upward bias. In such scenario, it is strongly advised to avoid shorts and use any downsides to make selective purchases. The only thing that the Markets are in overbought zone makes us little cautious otherwise the Markets continue to show very strong under current. However, until a new high is formed, the exposures should be controlled. Overall, positive caution is advised for today.

Milan Vaishnav,

Consulting Technical Analyst,

+91-98250-16331

Daily Market Trend Guide -- Wednesday, March 12, 2014

MARKET REPORT March 12, 2014

The Markets took a breather yesterday after five days of gains and remaining in overbought territory as it opened positive but ended the day with modest losses. The Markets opened on a very mild positive note traded positive but with capped gains in the morning trade. The Markets formed its intraday high of 6562.85 in the morning trade and thereafter pared its morning gains to trade again. In the afternoon trade onwards, the Markets saw some mild profit taking coming in as it consolidated at higher levels on expected grounds. The Markets transformed itself into falling trajectory and kept losing ground steadily as it dipped into negative. It went on to form the day’s low of 6494.25 towards the end of the session. It finally ended the day at 6511.90, posting a modest loss of 25.35 points or 0.39% while forming a parallel bar on the Daily High Low Charts.

MARKET TREND FOR TODAY

As we had mentioned in our yesterday’s edition of Daily Market Trend Guide, the Markets have started showing signs of weariness and it consolidated yesterday at higher levels. Today is going to be no different. The Markets are expected to open on a flat or little negative note and look for directions. The Markets are likely to consolidate and continue with its mild corrective activity as it continues to trade in “overbought” territory.

The levels of 6560 and 6585 would act as immediate resistance for the Markets. The supports exist at 6475 and 6430 levels.

The RSI—Relative Strength Index on the Daily Charts is 72.0231 and it is neutral as it shows no bullish or bearish divergences or any kind of failure swings. But it continues to trade in the overbought territory. The Daily MACD is bullish as it trades above its signal line.

On the derivative front, NIFTY March futures have added over 3.87 lakh shares or 2.13% in open interest. This shows that the underlying strength of the Markets is very strong and there is been no offloading of positions that was seen. In fact some shorts have already started being created in the system.

Going by the pattern analysis, the Markets have formed an immediate top of 6562. For any fresh up move to occur, it will have to move past this level. Until this happens, the Markets would continue to consolidate at higher levels. During this period, we would often see Markets losing ground on lower volumes and trading in a capped range.

All and all, the Markets are likely to continue to consolidate at these levels again. We might see little negative opening but it is advised to refrain from creating any fresh shorts in the Markets. The sector specific performance would continue and this is likely to prevent Markets from having any deep cuts. Range bound trade with some amount of volatility on either side cannot be ruled out. While remaining light on positions, highly stock specific approach is advised for today.

Milan Vaishnav,

Consulting Technical Analyst,

+91-98250-16331

Tuesday, March 11, 2014

Daily Market Trend Guide -- Tuesday, March 11, 2014

MARKET REPORT March 11, 2014

The Markets continued to inch upwards for the fifth day in a row as it registered moderate gains yesterday while continuing to remain in “overbought” territory. The Markets opened on a flat note showing much resilience to the Asian weakness and traded with much capped range in the early minutes of the trade. After opening flat, the markets momentarily dipped in the negative territory in the early morning trade while it registered its day’s low of 6487.35. It continued to trade in the negative territory until the afternoon trade but traded with very limited losses. In the second half of the session, the Markets moved in the positive territory on back of some more buying by the FIIs and moved towards giving the day’s high of 6562.20 in the late afternoon trade. The Markets came off a bit from those levels and finally ended the day at 6537.25, posting a modest gain of 10.60 points or 0.16% while continuing to form a higher top and higher bottom on the Daily High Low Charts.

MARKET TREND FOR TODAY

The Markets has showed first signs of weariness at higher levels yesterday though it continued to end the day with modest gains. This tends to happen and Markets tend to remain “overbought” for some time during such up moves. For today, expect the Markets to open on a flat and quiet note and look for directions again. The intraday trajectory that the Markets forms would be critically important today and there are bright chances that the Markets continue with its consolidation at higher levels.

For today, the levels of 6560 and 6585 would act as immediate resistance for the Markets. The supports exist at 6485 and 6450 levels.

The RSI—Relative Strength Index on the Daily Chart is 75.0965 and it has reached its highest value in last 14-days which is bullish. However, it continues to grossly remain in “overbought” territory. It does not show any bullish or bearish divergence. The Daily MACD continues to remain bullish as it trades above its signal line.

On the derivative front, the NIFTY March futures open interest has remained unchanged as it has just added nearly 60,450 shares or 0.33% in open interest. This shows that there was no major buying seen yesterday, over all on net basis and no major unwinding was seen as well. This implies that there was churning of portfolio seen in the Markets yesterday.

Going by the pattern analysis, the Markets clearly continues to remain grossly “overbought”. Given this, with every move on the upside, the Markets are more likely to see some consolidation or minor profit taking from higher levels. The consolidation / mild profit taking in the Markets is now almost imminent and it would be in fact healthy for the Markets to strengthen its base again for sustainable up moves. However, it does happen the Markets continue to remain in such “overbought” territory for some time in case of liquidity driven rallies.

All and all, the Markets are overbought and this certainly warrants some discretion in making fresh purchases. It is continued to be advised, as we have mentioned in our previous edition of Daily Market Trend Guide as well that profits now need to be protected at higher levels. Also, blanked buying should be avoided. It is time to adopt highly stock specific approach and any downsides / consolidation should be used to make fresh purchases. Overall, cautious outlook with controlled exposure is advised for today.

Milan Vaishnav,

Consulting Technical Analyst,

+91-98250-16331