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Thursday, August 7, 2014

Daily Market Trend Guide -- Thursday, August 07, 2014

MARKET REPORT August 07, 2014

The Markets took a corrective turn again, much on expected lines as it opened negative and ended the day with losses. The Markets opened on a modestly negative note and continued to trade with capped losses in the morning session. Though this time kept the losses under check but the bias continued to remain negative. It drifted some more on the downside in the afternoon trade, only to recover a bit again. However, the last hour and half of trade saw some more weakness creeping in as the Markets continued to drift lower again. It went on to form the day’s low of 7658.95 towards the end of the session. No major recovery was seen and the Markets finally ended the day at 7672.05, posting a net loss of 74.50 points or 0.96% while forming a slightly lower top but higher bottom on the Daily High Low Charts.

MARKET TREND FOR TODAY

Today, expect the Markets to once again open on a quiet note and look for directions. Though intraday trajectory would be crucially important to decide the trend for today, the overall session is likely to remain in a range while the Markets continuing to resist at certain pattern resistances while remaining in the broadening formation.

For today, the levels of 7720 and 7745 would act as immediate resistance for the Markets, the supports come in at 7620 and 7580 levels.

The RSI—Relative Strength Index on the Daily Chart is 50.99 and it has reached its lowest levels in last 14-periods. Though it does no show any bullish or bearish divergence. The Daily MACD continues to remain bearish as it trades below its signal line.

On the derivative front, NIFTY August futures have added 6.06 lakh shares or 4.62% in Open Interest. This shows that some fresh shorts have been added in yesterday’s decline that has led to increase in open interest.

Going by the pattern analysis, the Markets continue to remain in broadening formation. Having said this, the Markets are likely to trade in a range, remain range bound while giving intermittent pullbacks on lower volumes. It would continue to resist to its key pattern resistances. Until the Markets goes for a clear breakout again, such pattern of trades would continue wherein the Markets sees intermittent pullback with overall corrective bias.

Overall, it is continued to be advised to protect profits at higher levels vigilantly. Stock specific approach should be maintained as selective out performance would continue. Still, overall exposures should be curtailed. While maintaining adequate liquidity, cautious outlook is advised for the Markets.

Milan Vaishnav,

Consulting Technical Analyst,

+91-98250-16331

Wednesday, August 6, 2014

Daily Market Trend Guide -- Wednesday, August 06, 2014

MARKET REPORT August 06, 2014

The Markets saw a very volatile session yesterday especially after announcement of RBI Credit policy as it swung in either direction before closing with modest gains. The Markets opened on a quiet and mildly positive note on expected lines and spent the morning session in a very narrow and sideways movement while briefly dipping into the red. Post RBI Announcement wherein it kept Repo, Reverse Repo Rate unchanged and reduced SLR by 0.50%, it saw some wild reaction to it. After seeing a brief spurt, the Markets saw a volatile and sharp dip wherein it lost nearly 70-odd points from its opening levels and went on to dip into negative and form the day’s low of 7638.55. However, post this knee-jerk reaction, the Markets saw some slow but steady recovery which saw some more strength towards the end. The Markets not only recovered all of its losses but form the day’s high of 7752.45 in the last minutes of the trade. It finally ended the day at 7746.55, posting a net gain of 62.90 points or 0.82% while forming a higher top and higher bottom on the Daily High Low Charts.

MARKET TREND FOR TODAY

Today, expect the Markets to open on a quiet and mildly negative note and take some breather from the advances that it has been making. We can expect the Markets to open on a mildly negative note and in attempt to recover in the later stage meet some of its pattern resistance levels. Some consolidation is expected to take place again and we can see some intermittent bouts of profit taking again.

For today, the levels of 7780 and 7825 would act as immediate resistance for the Markets. Supports come in much lower at 7680 and 7630 levels.

The RSI—Relative Strength Index on the Daily Chart is 56.1588 and it is neutral as it show no bullish or bearish divergence or any kind of failure swing. The Daily MACD continues to remain bearish as it trades below its signal line.

On the derivative front, NIFTY August futures have added over 3.74 lakh shares or 2.93% in Open Interest. The NIFTY PCR stands at 0.87 as against 0.86 yesterday.

Going by the pattern analysis, the Markets continue to remain in overall “Broadening Formation”. Therefore, the overall behaviour of the Markets is likely to change. We would no live more in the era of technical pullbacks than fresh breakouts until the Markets moves past previous highs that it has formed. While continuing to encounter pattern resistances, the volumes remain typically low in pullbacks under such structure.

Overall, the Markets are likely to see a subdued opening today. Following quiet opening, it would be important to guard profits at any higher levels very vigilantly. Fresh purchases may be made selectively as sectoral out performance would be seen. While maintaining adequate liquidity, neutral outlook for the Markets is maintained for today.

Milan Vaishnav,

Consulting Technical Analyst,

+91-98250-16331

Tuesday, August 5, 2014

Daily Market Trend Guide -- Tuesday, August 05, 2014

MARKET REPORT August 05, 2014

The Markets saw a smart technical pullback yesterday as it opened positive, though fluctuated a bit but recovered smartly in the end to end the day with decent gains. The Markets opened positive and thereafter strengthening further in the morning trade, saw some weariness creeping in as it gradually pared some of its gains in the first half of the session. The Markets still managed to trade with decent gains even after coming off much from its morning highs. However, the last hour and half of the trade saw some sharp recovery coming in. The Markets pullback smartly and not only moved back to its opening levels but moved past it to form the day’s high of 7694.80. Minor throwback was seen from those levels and the Markets ended the day at 7683.65, posting a net gain of 81.05 points or 1.07% while forming a lower top but higher bottom on the Daily High Low Charts.

MARKET TREND FOR TODAY

Today, expect a total flat start to the Markets. The Markets are expected to open on a quiet note and look for directions. What we have seen yesterday was a technical pullback, though it has come on lower volumes. The Markets continues to remain in its original pattern mentioned in our yesterday’s edition of Daily Market Trend Guide. Further, today, RBI would announce its credit policy later in the day and we would see the Markets reacting to it.

For today, the levels of 7720 and 7765 would act as immediate resistance for the Markets. The supports come in at 7620 and 7550 levels.

The RSI—Relative Strength Index on the Daily Chart is 52.3743 and it is neutral as it shows no bullish or bearish divergence or any kind of failure swings. The Daily MACD remains bearish after it reported a negative crossover yesterday and now trades below its signal line.

On the derivative front, NIFTY August futures have added over 2.75 lakh shares or 2.21% in Open Interest. This shows some fresh longs have been added in yesterday’s trade.

The Markets continue to remain in broadening formation, going by the pattern analysis. However, the volumes show a very definitive indications in such cases. Though we continue to see technical pullbacks of the likes that we saw yesterday, they come with much lower volume. Yesterday as well, the volumes have hardly remained average. The Markets would continue to meet its pattern resistances while attempting to move upwards. Though immediate and intermittent pullbacks may be seen, one should heavily guard against continuation of correction which can resume any moment once again if the Markets resists at certain levels.

Overall, we would continue to see some stock specific activities and the Markets would also react to the RBI coming up with the credit policy. Though any change in Repo Rate, CRR or SLR has been widely ruled out, it is likely to keep the session volatile. We continue to remain light on overall exposures and continue to maintain adequate amount of liquidity and caution in the Markets for today.

Milan Vaishnav,

Consulting Technical Analyst,

+91-98250-16331

Monday, August 4, 2014

Daily Market Trend Guide -- Monday, August 04, 2014

MARKET REPORT August 04, 2014

The Markets ended the week on a bearish note as it extended its down move and ended the day on Friday with losses. The Markets opened on a negative note however showed quite resilience in the first half of the session. The Markets, after opening on a lower note, attempted to recover most of its losses by afternoon trade. However, after this, in the second half of the session, the bearish sentiment took over and later intensified. The Markets saw selling pressure coming in and it pared nearly all of its recovery. It later drifted lower and went on to form day’s low of 7593.90 towards the end of the session. No major recovery was seen being attempted and it finally ended the day at 7602.60, posting a loss of 118.70 points or 1.554% while forming a sharply lower top and lower bottom on the Daily High Low Charts.

MARKET TREND FOR TODAY

Today, we can expect a pullback from the Markets and expect it to open on buoyant note. It is important to note that we have been reporting a “Broadening Formation” on the Daily as well as Weekly Charts and this is a classical reversal formation. Within this formation, the Markets would continue to post intermittent pullbacks. Today as well, we can expect a positive start to the Markets.

For today, the levels of 7660 and 7710 would act as immediate resistance to the Markets. The supports exist at 7574 (50 DMA) and further down at 7495 levels.

The RSI—Relative Strength Index on the Daily Charts is 46.8887 and it remains neutral with no bearish or bullish divergences or any failure swings. The Daily MACD stands bearish as it has reported a negative crossover today and it now trades below its signal line. On the Weekly Charts, RSI has just crossed below its topping out formation which is bearish. Also, Weekly RSI has reached tis lowest value in last 14-periods and this is bearish. Further, RSI has set a new Weekly low whereas NIFTY has not yet and this is clear Bearish Divergence on the Weekly Charts. The Weekly MACD still remains bullish trading above its signal line.

On the derivative front, NIFTY August futures have shed 7.44 lakh shares or 5.63% in Open Interest and this is clear indication that offloading has been seen on Friday’s session and no shorts have been freshly created.

Going by the pattern analysis, it is clear that the Markets are undergoing a classical reversal pattern and during this phase, we would see intermittent pullbacks but this pattern would see a overall bearish implication in the immediate short term. The volumes would be critical to confirm this reversal. It would be higher when the Markets pares its gains and relatively much lower when the Markets would see any intermittent pullbacks.

All and all, positive and strong opening expected today. It would be important to see if the Markets sustains this opening and capitalizes on that. Any purchases, if any, should be made selectively. In coming immediate short term, one will have to rely heavily on individual stock specific performances. Overall, cautiously positive outlook is advised for today.

Milan Vaishnav,

Consulting Technical Analyst,

+91-98250-16331