MARKET REPORT September
07, 2014
On Friday, the Markets continued to consolidate and did so
with some amount of volatility ingrained as it held its previous top and ended
the day with minor losses. The Markets opened on a positive note and formed its
intraday high of 8122.70 in the early minutes of the trade. Markets hovered
around those levels and did not move past its previous high and shed some of
its gain as it went ahead in the session. The Markets saw paring of all of its
gains by afternoon trade but traded with capped losses in the negative
territory as well. In the end it slipped
little further to form the day’s low of 8049.85 by recovered from that low as
well. It finally ended the day at 8086.85, posting a minor loss of 9.10 points
or 0.11% while forming a almost parallel bar on the Daily Bar Charts.
MARKET TREND FOR MONDAY, SEPTEMBER 08, 2014
Tomorrow’s opening would continue to remain crucial. As
evident, the Markets have not moved past its previous high of 8141.90. In order
to continue with its up move the Markets will have to move past that level. Further,
we can expect a quiet opening tomorrow and it would be critically important for
the Markets open and trade 8050-8075 levels in order to avoid any weakness.
The levels of 8140-50 and 8075 would continue to act as
resistance. The supports exists at 7970 and 7910 levels.
The RSI—Relative Strength Index on the Daily Chart is 70.7605
and it does not show any bullish or bearish divergence or any failure swings.
However, it trades in “overbought” territory. The Daily MACD too trades above
its signal line. On the Weekly Charts, the Weekly RSI is 72.4461 and it does
not show any failure swings. However, it not only trades in “Overbought”
territory, but also shows a Bearish Divergence as it has not formed its
14-period high whereas NIFTY has done so. The Weekly MACD continues to trade
above its signal line.
On the derivative front, the NIFTY September futures have gone
on to shed over 5.77 lakh shares or 3.63% in Open Interest. This phenomenon has
been observed for second day in a row and it clearly shows offloading of long
positions at higher levels.
Going by pattern analysis, the Markets have not shown a
clear breakout from a broadening formation. It did attempt to breakout but have
shown a throwback on expected lines. Any closing in the range of 8070-50 would
bring the Markets again in that formation and therefore no breakout would be
achieved. Further, on the other side, even if the Markets achieve further up
move it is doing to while in “overbought” condition and this would certainly
make the Markets heavily prone to selling from higher levels.
Overall, taking in view the pattern and structure of the
Charts and also keeping in mind the F&O data and the Weekly Charts as well,
the Markets are not likely to have a run-away rise from here. Even if it does,
it would be heavily prone from pressure from higher levels and also get further
overbought. There are all chances that the volatility would persist. Any upside
should be continued to be used for protecting profits. While making selective
purchases as well, vigilant approach is advised.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
