MARKET TREND FOR WEDNESDAY, APRIL 05, 2017
Indian equity markets will open today after a day of slumber
because of a trading holiday yesterday. On Monday, the benchmark NIFTY50 had
ended the day at all time high while posting smart gains after a good opening
and even better Closing. Today, we will see the Markets adjusting to the global
trade set-up and may witness a modestly positive opening. The NIFTY has ended
at a fresh lifetime high and a fresh breakout has been initiated but at this
juncture, we would like to reiterate that some amount of consolidation would be
required to make these up moves healthier. Some amount of profit taking once
again can be expected at higher levels.
The levels of 9250 and 9285 may pose resistance to the
Markets while supports can be expected at 9195 and 9130 zones.
The Relative Strength Index – RSI on the Daily Chart is
70.3672 and it now not only trades in overbought territory but also throws up
Bearish Divergence against NIFTY. The Daily MACD stays bearish while still continuing
to trade below its signal line.
NIFTY April futures have shed over 5.80 lakh shares or 2.53%
in Open Interest. This reflects heavy short covering on Monday. It would be
interesting to see if this is followed by a fresh buying in coming days.
The pattern analysis shows that the NIFTY has now
successfully achieved a breakout from 8975-9000 zones. The entire process was
completed after the NIFTY achieving the breakout, giving a throwback by
returning to the same levels from where it broke out and then pulling back
again and moving past its previous high.
Overall, there is no doubt that the overall uptrend remains
very strong and intact. The Liquidity is fiercely chasing the Markets and it is
likely to continue to do so in coming days as well. However, the overbought
nature of the Markets and the evident tiredness on the lead indicators show
some likelihood of the Markets taking a breather. This may result into some
profit taking at higher levels and some amount of volatility creeping in as
well. We continue to reiterate our advice of remaining extremely stock specific
and protect profits at higher levels vigilantly and making effective sectoral
shifts.
Milan Vaishnav, CMT
Technical Analyst
(Research Analyst, SEBI Reg. No. INH000003341)
Member:
Market Technicians Association, (MTA), USA
Canadian Society of Technical Analysts, (CSTA), CANADA
+91-98250-16331
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