Tuesday, October 7, 2014

Daily Market Trend Guide -- Tuesday, October 07, 2014

MARKET REPORT                                                                                     October 01, 2014
The Markets ended with nominal losses on Wednesday, 1st of October ahead of mini vacation that followed while trading on very cautious note and low volumes. The Markets saw a expected quiet opening and while opening on a modestly positive note, it formed its day’s high of 7977.50 in the early minutes of the morning trade. Thereafter, the Markets drifted in the negative territory and while doing so, it overall traded in a much capped range and on very low volumes. While drifting in the red, the Markets went on to form the day’s low of 7936.70 in the mid afternoon trade. What followed thereafter was a very mild form of recovery. The Markets attempted to recover from its intraday lows to trade again on a flat note without making any decisive moves. As mentioned, the Markets traded on low volumes and it finally drifted bit lower to end the day at 7945.55, posting a minor loss of 19.25 points or 0.24% while forming a lower top but slightly higher bottom on the Daily High Low Charts.


MARKET TREND FOR TUESDAY, OCTOBER 07, 2014 

Markets will see some shaky start as it would open today after a slumber of 5 days (3 holidays and a weekend) and while doing so, it would try and adjust to some volatility that the Global Markets saw in these days. With some mildly positive opening expected, the Markets are overall likely to remain in a trading range with some amount of positive bias until it maintains levels above its 50-DMA.

The levels of 8030 and 8075 would act as resistance and the levels of 7805 and 7818 would continue to act as supports.

The RSI—Relative Strength Index on the Daily Chart is 46.9273 and it remain neutral as it shows no bullish or bearish divergences or any failure swing. The Daily MACD remains bearish as it trades below its signal line.  On the Weekly Chart, the RSI is 65.2130 and it remains neutral as well with no bullish or bearish divergence or failure swing. The Weekly MACD is bearish as it trades below its signal line. 

On the derivative front, the NIFTY October futures have shed 62,000 shares or nominal 0.40% in Open Interest. This signifies that there has been no major offloading that was seen on 1st October (previous) session.

Returning to pattern analysis, the Markets continue to remain in “reverse triangle” formation, also known as “Broadening Formation”, more distinctly now on Weekly Charts. On the Daily Chart, this is lost significance as the Markets have continued to trade in broad range, though distinctly failing to break out on the upside. So long as the Markets continue to maintain levels above of 50-DMA at Close, it would continue to remain in a trading range with mild tinge of positive bias.

Overall, while the Markets adjust to global markets after 5-days of holidays, we would see some amount of volatility ingrained in it. The Markets are likely open and remain positive in the initial trade and some technical pullback in oversold stocks and some buying in select stock specific stocks may be seen. While continuing to maintain a moderate exposure, cautiously positive outlook is advised for the day.

Milan Vaishnav,
Consulting Technical Analyst,
Af. Member: Market Technicians Association (MTA), USA
Af. Member:
Association of Technical Market Analysts, INDIA

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