MARKET REPORT June
16, 2014
The correction finally set in the Markets on Friday which
stood long overdue and impending as the Markets ended the day with good amount
of losses. The Markets opened on a flat to mildly positive note and formed its
intraday high of 7678.50 in the early minutes of the trade. The Markets
thereafter spent the morning session in sideward movement while trading in a
very capped range. Markets saw selling
pressure coming in later in the day and also intensified by late afternoon
trade taking the Markets to its intraday low of 7525.35, losing some 150-odd
points from its day’s high. The Markets never really saw any attempt to recover
from those lows as it spent the rest of the session again in the sideways
manner. With no recovery coming in, the Markets finally ended the day at
7542.10, posting a net loss of 107.80 points or 1.41% while forming a higher
top but sharply lower bottom on the Daily High Low Charts.
MARKET TREND FOR TODAY
As we had analysed in one of our previous editions of Daily
Market Trend Guide, the levels of 7700.05 have not become a temporary top for
the Markets. Today, expect the Markets to open on a lower note and continue
with its corrective activities, at least in the initial trade. The Markets are
most likely to see continuing correction and the intraday trajectory would
continue to remain important for the Markets.
For today, the levels of 7580 and 7625 would act as
immediate resistance for the Markets. The supports would come in at 7500 and
7430 levels.
The RSI—Relative Strength
Index on the Daily Chart is 66.3606 and it remains neutral as it shows no
bullish or bearish divergence on the Daily Charts. However, it has moved below
its overbought zone and it is bearish. The Daily MACD continues to trade above
its signal line, but it is moving towards reporting a bearish crossover. On the
Candles, An engulfing bearish line occurred (where a black
candle's real body completely contains the previous white candle's real
body). The engulfing bearish
pattern is bearish during an uptrend (which appears to be the case with
NIFTY). It then signifies that the
momentum may be shifting from the bulls to the bears.
On the derivative front,
the NIFTY June Futures have shed over 15.58 lakh shares or 9.34% in Open
Interest. This is an extremely clear indication that heavy offloading /
unwinding of positions have occurred in the Markets on Friday.
Going by the pattern
analysis, the Market shave formed a potential top at 7700.05 and it is showing
a corrective trend. This corrective trend is likely to continue wit the Markets
finding first supports near 7430-7450 levels. We have had global events like
Iraq to discuss but the pattern analysis clearly indicated that such correction
had been long overdue and imminent from quite some time. Any sustainable up
move shall occur only after Markets moves past its immediate top.
All and all, given this
scenario, the Markets are likely to continue with their corrective activity, at
least in the initial trade. While making
fresh purchases, it is best advised to stick to defensives and keep vigilantly
protecting profits at higher levels. While maintaining extremely stock specific
and selective approach, cautious outlook is advised for today.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
