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Thursday, June 26, 2014

Daily Market Trend Guide -- Thursday, June 26, 2014

MARKET REPORT June 26, 2014

Yesterday’s day was spent in absolute consolidation as the Markets virtually spent the entire session in a very capped and narrow 20-odd points band and ended the day with minor losses. The Markets opened on a mildly positive note and soon formed its intraday high of 7589.25 in the early minutes of the day. The Markets hovered around those levels for a while and then slipped into the red. It remained in the red for the rest of the session making minor and intermittent recoveries but never moved back in the positive territory. The Markets remained absolutely direction-less with a negative bias and finally managed to end the day at 7589.25, posting a net loss of 10.95 points or 0.14% while forming a similar top and a higher bottom on the Daily High Low Charts.

MARKET TREND FOR TODAY

Today we enter the expiry day of the current June series and the session, like yesterday, is likely to remain dominated with rollovers and given some short positions, some intermittent jerks cannot be ruled out. The Markets are again expected to open on a quiet note and look for directions. Though the bias remains negative, sharp short covering, given the rollovers cannot be ruled out. Volatility shall persist.

For today, the levels of 7595 and 7630 would act as immediate resistance on the Daily Charts. The supports exist at 7510 and 7440 on the downside.

The RSI—Relative Strength Index on the Daily Chart is 61.7439 and it is neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD remains bearish as it continues to trade below its signal line.

On the derivative front, heavy rollovers continued as NIFTY June series shed 20.97 lakh shares or 18.45% in Open Interest whereas NIFTY July series added over 31.16 lakh shares or 39.93% in Open Interest. Market Wide rollovers too have remained more or less near its 3-months average.

Going by the pattern analysis, the Markets have managed to maintain levels above of 7510 and until that happens it is likely to continue to consolidate. In event of any slippage below the levels of 7510, we may see some more weakness creeping in. The Markets are currently in a broad trading range, and also in somewhat no-trade zone given the direction-less trend in the last couple of sessions. However, this can be termed as a capped and range bound consolidation in the Markets.

Given this reading, it is advised to continue to take fresh positions on highly selective basis and mainly on defensives. High beta stocks should be avoided and overall leverage too should be controlled and liquidity should be maintained. With the Markets likely to swing in either direction, more due to expiry and also due to technical indicators, overall low amount of exposure and caution are continued to be advised for today.

Milan Vaishnav,

Consulting Technical Analyst,

+91-98250-16331

Wednesday, June 25, 2014

Daily Market Trend Guide -- Wednesday, June 25, 2014

MARKET REPORT June 25, 2014

Despite adverse technicals, the Markets saw a sharp recovery in yesterday’s session and ended the day with decent gains though volatility continued to remain ingrained into the Markets. The Markets opened on a positive note and saw stable trading in the first half of the session while it decently maintained gains. The gains got some further strength in the afternoon trade wherein the Markets went on to form the day’s high of 7593.35. However, in the late afternoon trade, the Markets suddenly saw some paring of gains. This coming off was little rapid as the NIFTY saw some paring of 60-odd points in a flash. However, the Markets were able to recover again and finally ended the day at 7580.20, posting a decent gain of 85.85 points or 1.16% while forming a higher top and higher bottom on the Daily High Low Charts.

MARKET TREND FOR TODAY

Today, we enter the penultimate day of the expiry of current derivative series and the Markets would continue to remain dominated with rollovers centric activity. The volatility will refuse to go away and shall remain ingrained. Today, we can expect a flat opening for the Markets but as the figures suggest, there are chances that we see some continuation of up move in the initial trade and at the same point, we can also see some volatile swings downward bias in the second half of the session.

For today, the levels of 7605 and 7660 would act as immediate resistance. The supports exist at 7510 and 7460 levels.

The lead indicators continue to point towards mild negative bias. The RSI—Relative Strength Index on the Daily Chart is 62.7827 and it remains neutral as it shows no bullish or bearish divergence or any kind of failure swings. The Daily MACD continues to remain bearish as it trades below its signal line.

On the derivative front, heavy rollovers continued. The NIFTY June futures shed over 21.87 lakh shares or 16.14% in Open Interest while the July Series added 36.87 lakh shares or 89.55% in Open Interest.

Going by the pattern analysis, the Markets have held on to a mild pattern support of 7510 levels. As evident from the Charts, the Markets will have to move past the levels of 7700.05 for a fresh upward breakout and until this happens, we will continue to see the Markets in a consolidation state. However, this consolidation shall remain volatile as we have been seeing as the trading range remains broad.

Overall, we continue to reiterate our cautious stand in the Markets. We continue to reiterate to remain extremely stock specific with a bias towards defensives and also to keep protecting profits at higher levels. While maintaining liquidity and very moderate leverage, cautious outlook should be continued in the Markets today.

Milan Vaishnav,

Consulting Technical Analyst,

+91-98250-16331

Tuesday, June 24, 2014

Daily Market Trend Guide -- Tuesday, June 24, 2014

MARKET REPORT June 24, 2014

What seemed to be a fresh correction setting in to the Markets turned out to be a mere consolidation again as the Markets recovered most of its losses in the last 30-minutes of trade to end with just a modest loss. The Markets opened on a mildly positive note and formed its day’s high of 7534.80 in the early minutes of the trade. After briefly trading into the green the Markets slipped into the negative territory and remained in the negative for the rest of the entire session. It went on to gradually making fresh lows and in the late afternoon trade, went on to form the day’s low of 7441.60, slipping over 90-odd points from the intraday high. However, last 25-30 minutes of trade saw sharp short covering from lower levels. Markets recovered bulk of its losses and finally ended the day at 7493.35, posting a net loss of 18.10 points or 0.24% while forming a lower top and lower bottom on the Daily High Low Charts.

MARKET TREND FOR TODAY

Today as well, expect the Markets to open on a positive note and look for directions. As evident on the Charts, the levels of 7510-7515 would be crucial and any slippage or trading below these levels would induce further weakness in the Markets. With rollovers started, the session would also remain dominated with rollover activities. Given the pattern analysis and the lead indicators, the chances of corrective activities continuing are high.

For today, the levels of 7520 and 7565 would act as immediate resistance for the Markets. The supports exist much lower at 7445 and 7410 levels.

The lead indicators continue to paint a weak picture on the Daily Charts. The RSI—Relative Strength Index on the Daily Chart is 57.5188 and it has reached its lowest value in last 14-days which is Bearish. Also, the RSI has set a fresh 14-day low whereas NIFTY has not yet and this is continuance of clear Bearish Divergence. The Daily MACD continues to trade below its signal line and remain bearish as well.

On the derivative front, NIFTY June futures have shed over 4.10 lakh shares or 2.94% in Open Interest whereas July Series have added over 15.81 lakh shares or 62.39% in Open Interest. This indicates rollovers. NIFTY has reported 23% rollovers, whereas Market wide rollovers have stood at 28%, both of them a notch below their average.

Going by pattern analysis, the Markets have minor resistance at 7510-7515 levels and if the Markets do not sustain these levels, some more weakness is likely to creep in. Otherwise, it is likely to consolidate in a broad trading range, though with corrective bias.

All and all, given the technicals, reading of lead indicators and the F&O data, the possibility of corrective action is likely to continue. Also, at the same time, volatility would continue to remain ingrained in the Markets. It is advised to continue to remain stock specific and maintain moderate exposures. Overall, cautious to mildly negative outlook is advised for today.

Milan Vaishnav,

Consulting Technical Analyst,

+91-98250-16331