MARKET REPORT September
04, 2014
The Markets took a breather after nine days of consecutive
gains as it opened negative and remained negative throughout the day and ended
the day with minor losses. The Markets opened on a negative note and continued
to drift lower in the morning trade. For the most part of the session until
late afternoon trade the Markets more or less traded in a range but drifted
little lower. It formed its intraday low of 8060.90 in the mid afternoon trade
but did not break its capped range on the downside. In the last hour and half
of the trade, the Markets saw a very sharp up move wherein the Markets saw
recovery from its lower levels. At one point, the Markets nearly recouped all
of its losses but did not still enter into the positive territory. It finally ended
the day at 8095.95, posting a modest loss of 18.65 points or 0.23% while
forming a lower top and lower bottom on the Daily Bar Charts.
MARKET TREND FOR FRIDAY, SEPTEMBER 05, 2014
The opening would be very crucial tomorrow as the markets
have potentially formed a top at 8141 levels and have shown a throwback by
returning back to its breakout point as expected in our previous edition. The
Markets will have to maintain the levels above of 8130-50 zone in order to
continue with its up move but overall, there are bright chances that the
Markets may continue to remain volatile while being forced to consolidate at
higher levels.
The levels of 8040-60 zone would act as immediate resistance
for the Markets. The supports come in at 8060 and 7970 levels.
The RSI—Relative Strength Index on the Daily Chart is
71.9730 and it is neutral as it shows no bullish or bearish divergence or any
failure swings. However, it still continues to trade in “overbought” territory.
The Daily MACD continues to trade above its signal line.
On the derivative front, the NIFTY September futures have
over 9.82 lakh share in Open Interest. This
very evidently suggests that what we saw in form was sharp rise was purely
short covering and quite a good amount of positions have been reduced. It would
be important to see if the Markets continues to drift lower and the breakout
signal that it threw proves to be a mere whipsaw; or more simply to say a false
/ failed breakout signal.
Going by the pattern analysis, even though the Markets have
attempted a breakout, as of now it has seen a throwback as it retraced a bit to
its breakout levels. However, even if the Markets attempts again to move
upwards, the levels would certainly get unhealthy as it would be inching
upwards while remaining in “overbought” levels. There are bright chances that
the Markets see some more consolidation.
Overall, given this, though one may continue to make fresh
purchases on selective note, any profit on the long side should be very
vigilantly protected. Any rallies should be first used to book and protect
profits and then for buying, and that too on ultra selective basis. With the
pattern analysis and reading F&O data along with it, pressure at higher
levels and some profit taking from higher levels just cannot be ruled out.
Continuance of caution is advised.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
