MARKET REPORT May
23, 2014
The Markets continued to show signs of tiredness in
yesterday’s session as came off from the day’s high before ended the day with modest gains. The
Markets opened on a modestly positive note yesterday and in the first half of
the session, kept inching upwards in rising trajectory while gradually forming
new tops. By afternoon trade, the Markets went on to form the day’s high of
7319.55. However, in the second half, the Markets saw itself changing its
trajectory. In wake some selling pressure, the Markets started gradually paring
its gains. By late afternoon trade, the Markets ended up paring most of its
gains while forming day’s low of 7258.15. A minor recovery was seen from the
lows and the Markets finally ended the day at 7276.40, posting a net gain of
23.50 points or 0.32% while forming a higher top and higher bottom on the Daily
High Low Charts.
MARKET TREND FOR TODAY
Today’s analysis remains more or less similar on yesterday’s
lines. The Markets are expected to open on a flat to modestly positive note and
look for directions. Given the local technicals on the Charts, the F&O data
and overall cues, the Markets are expected to continue with its corrective
activities and we can witness paring of gains, if any. The intraday trajectory
would continue to remain important and volumes too would be critical.
For today, the levels of 7310 and 7345 are immediate
resistance levels for the Markets today. The supports exist much lower at 7210
and 7075 levels on the down side.
The lead indicators too show some signs of tiredness. The RSI—Relative
Strength Index on the Daily Charts is 79.4273 and it does not show any failure
swings. It continues to trade in “extremely overbought” territory. Also, the
NIFTY has marked a new 14-period high but the RSI has not yet and this is a
clear “Bearish Divergence”.
On the derivative front, the NIFTY May futures have shed
nearly 9.79 lakh shares or 4.43% in open interest. This very clearly indicates
that there has been shedding of long / unwinding of positions from yesterday’s
high levels while the Markets pared its gains.
On the charts, going by pattern analysis, the Markets have
consolidated till today after forming a very high bar on the Daily High Low
Charts and the bias has remained on the downside as the Market have shown
reduction in open interest. Further, there would be no sustainable up move as
the Markets continue to trade in “extremely overbought” territory and any up
move shall continue to make the markets unhealthy and pose risks of equally
imminent sharp correction at some point of time.
All and all, the Markets are consolidating and unless it
corrects itself a bit and lead indicators suggest, we are exposed to equally
sharp correction which looks imminent and long overdue. The Markets cannot
continue to rise in the manner in which they are rising even if they are
supported by very strong inflows. Such meteoric rise even in the overbought
zone certainly makes the markets quite unhealthy susceptible to a sharp
correction. In such a scenario, we continue to reiterate advice of remaining
moderate on the overall exposure and maintain high degree of caution for today.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
