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Thursday, March 27, 2014

Daily Market Trend Guide -- Thursday, March 27, 2014

MARKET REPORT March 27, 2014

The Markets traded precisely as analysed in our yesterday’s edition of Daily Market Trend Guide as it remained buoyant in the first half of the session, saw some correction in the second half and ended the day at fresh highs while registering modest gains. The Markets opened on a positive note and traded with smart gains in the first half of the session. The first half saw the Markets trading with gains in sideward trajectory while it formed its day’s high of 6627.45. However, on anticipated lines, the Markets saw some profit taking from higher levels as it suddenly and sharply pared all of its gains in the second half of the session to trade flat. It briefly dipped into negative territory as well while it gave its intraday low of 6580.60. It however recovered back in the positive territory and finally ended the day at 6601.40, posting a modest gain of 11.65 points or 0.18% while continuing to form higher top and higher bottom on the Daily High Low Charts.

MARKET TREND FOR TODAY

Today, expect the Markets to open on a flat and modestly positive note and look for directions. The Markets have attempted t o achieve a breakout on the Daily Charts but the period of consolidation would continue as the Markets continue to trade in “overbought” territory with the lead indicators showing some minor signs of weariness. The Markets would continue to see a range bound consolidation. Today being an expiry day, the session would remain dominated with rollovers as well.

The levels of 6630 and 6655 would act as immediate resistance levels for the Markets. The supports exist at 6575 and 6510 levels.

The RSI—Relative Strength Index on the Daily Chart is 73.2473 and it does not show any failure swings. However, importantly, it continues to trade in “overbought” territory and it has not set a fresh 14-period high while NIFTY has done so. This is Bearish Divergence. The Daily MACD continues to trade above its signal line.

On the derivative front, the NIFTY along with stock rollovers have shown lesser rollover until today. This signifies that the shorts are not being rolled over into the next series and only the long rollovers are being seen. This translates into very strong undercurrent in the Markets which will prevent any major correction and keep the Markets in the consolidation zone for some more time.

Going by the technical charts, the Markets have attempted to break out from the two week consolidation period which was between the levels of 6415-6575. However, though it has managed to achieve it yesterday, the Markets will not see a clear run-away rally as they continue to trade “overbought” with lead indicators showing bearish divergence.

All and all, it is evident from the Daily Charts and F&O data that the Markets will take some more time before it gives a sustainable runaway rally. Before this, it will certainly spend some more time in consolidation. Being expiry today, the session is also likely to see ranged volatility. It is advised to vigilantly protect profits and makes fresh purchases on extremely selective basis. Since undercurrent continues to remain bullish, cautious optimism is advised for today.

Milan Vaishnav,

Consulting Technical Analyst,

+91-98250-16331

Wednesday, March 26, 2014

Daily Market Trend Guide -- Wednesday, March 26, 2014

MARKET REPORT March 26, 2014

The Markets had a volatile and range bound consolidation session yesterday wherein it moved in either direction of its previous Close and finally ended the day with minor gains. The Markets opened on a negative note and soon formed its intraday low of 6544.85 in the very early minutes of the trade. Thereafter, the Markets soon recovered to trade flat. The Markets spent the first half of the session in a narrow range with capped losses paring grounds and recovering it again. The second half of the session saw a sharp movement as the Markets spurted on the upside only to see paring of those gains. The last hour of the trade once again saw strength in the Markets as the Markets went back in the positive territory to form the day’s high of 6595.55. It finally ended the day at 6589.75, posting a minor gain of 6.25 points or 0.09% forming a slightly higher top and higher bottom on the Daily High Low Charts.

MARKET TREND FOR TO DAY

Even with the Markets remaining in “overbought” territory, it saw positive consolidation yesterday without showing much weakness even at higher levels. Today, expect the Markets to open on a positive note and continue with its up move in the initial trade. However, the second half of the session is likely to see some consolidation or mild profit taking from higher levels. We enter the penultimate day of expiry of current series and the session is also likely to remain dominated with rollover centric activities.

Today, the levels of 6595 and 6630 would act as immediate resistance for the Markets. The supports exist at 6550 and 6510 levels.

The lead indicators continue to remain in “overbought” territory. The RSI—Relative Strength Index on the Daily Chart is 72.5163 and it does not show any failures wings. However, it trades in the overbought territory and the NIFTY has formed a new 14-period high but RSI has not. This is Bearish Divergence as well. The Daily MACD continues to trade above its signal line.

As evident from the Daily Charts, the Markets have not completely broken out on the upside but it has certainly attempted to move out of the trading band of 6415-6575 levels. However, though there is a distinct possibility of a breakout on the Daily Charts, the Markets would not see a run-away rise as the lead indicators remain overbought. This would either make the Markets remain in consolidation for some more time or make the further up move little less sustainable and risky.

All and all, the Markets would see a positive opening but at the same time it is likely to remain ingrained with volatility due to rollovers. Further, there are also chances that the Markets would see some consolidation or mild profit taking at higher levels. Given this reading, it is strongly advised that more emphasis should be given to protection of profits at higher levels rather than making new purchases. Also, any dip from higher levels should be utilized to make fresh purchases while strictly avoiding shorts. Overall, neutral outlook is advised for today.

Milan Vaishnav,

Consulting Technical Analyst,

+91-98250-16331

Tuesday, March 25, 2014

Daily Market Trend Guide -- Tuesday, March 25, 2014

MARKET REPORT March 25, 2014

After almost two weeks of consolidation, the Markets attempted to break out of the of the broad trading range as it attempted to move past the critical all time high levels of 6575. The Markets yesterday opened on a positive note and immediately strengthened to move past this level as it went on to give the fresh life time high of 6591.50. The Markets maintained this buoyancy throughout the session on average volumes led by banking and other sectors. The Markets maintained these levels for the entire session and it finally managed to end the day at a fresh life time high at 6583.50 posting a robust gain of 88.60 points or 1.36% while forming a sharply higher top and higher bottom on the Daily High Low Charts.

MARKET TREND FOR TODAY

Though the Markets have attempted a breakout yesterday after almost two weeks of sidewards range bound consolidation, it would be critical to see if the Markets continues with its up move to confirm the breakout as the Markets now once again trade in the “overbought” territory. The Markets are expected to open on a flat note and look for directions and there is high probability that the Markets continues to once again consolidate around these levels.

For today, the levels of 6595 and 6630 would be immediate levels wherein the Markets could face resistance. Supports exist at 6550 and 6510 levels.

The RSI—Relative Strength Index on the Daily Chart is 72.1370. Though it does not show any failure swings it trades in “overbought” territory. Further, the NIFTY has formed a new 14-day high but the RSI has not. This is a bearish divergence. The Daily MACD continues to remain bullish as it trades above its signal line.

On the derivative front, the rollovers were witnessed. The NIFTY March futures have added over 4.96 lakh shares or over 2.48% in Open Interest. This indicators shows that even though the Markets are overbought, it might continue to show some strength even while remaining overbought for some more time.

Going by the pattern analysis, the Markets have given a upward breakout after consolidating in a broad trading range of 6415-6575 levels. The Markets have attempted to move past the upper band of this range and has closed above this as well. This generates a fresh buy signal on the Daily charts. However, we need to keep one important thing in mind that along with this, the Markets have become “overbought” and the lead indicators are showing some signs of weariness as well.

All and all, going by the above analysis, even with the undercurrent remaining certainly buoyant, there are chances that the Markets see some amount of fresh consolidation from higher levels. Given this reading, it is advised to refrain from blind purchases and protect profits at higher levels vigilantly. Only selective purchases may be made. Overall, cautious outlook is advised for today.

Milan Vaishnav,

Consulting Technical Analyst,

+91-98250-16331