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Thursday, April 3, 2014

Daily Market Trend Guide -- Thursday, April 03, 2014

MARKET REPORT April 03, 2014

The Markets continued to witness a typically “structured activity” as it has been witnessing over last couple of sessions as it opened modestly positive, remained in a ranged trade until the end and spurted in last hour of the trade to end the 10^th day of straight gains. The Markets opened on a modestly positive note and after opening positive, until the late afternoon trade kept gradually paring ground. The Markets pared almost all of its gains to trade nearly flat by late afternoon trade. The last hour and half of the trade once again saw it sharply recovering as the Markets went on to post the day’s high of 6763.50. The Markets finally ended the day at 6752.55, posting yet another gain of 31.50 points or 0.47% while continuing to form a higher top and higher bottom on the Daily High Low Charts.

MARKET TREND FOR TODAY

The Markets are now very explicitly in extremely overbought condition and are almost being “rigged” but unabated cash flows. The Markets are once again slated to see a flat to modestly positive opening. However, given the current condition of the Markets, we strictly advise the retain investor not to get carried away in a frenzied buying and remain extremely stock specific. The Markets have all the ingredients of a long overdue and imminent correction.

The Markets continue to trade in uncharted territory. The levels of 6790 and 6820 might see some resistance on the upside. The supports exist much lower at 6680 and 6610 levels.

The lead indicators continue to remain extremely overbought. The RSI—Relative Strength Index on the Daily Chart is 81.1889 and it has reached its highest value in last 14-days. It continues to remain in “extremely overbought” condition and does not show any bullish or bearish divergences. The Daily MACD continues to trade above its signal line.

On the derivative front, the NIFTY April futures have added over 2.46 lakh shares or 1.45% in Open Interest showing addition in long positions.

Going by the pattern analysis, the Markets have now got into most unhealthy pattern given the parabolic rise that it has witnessed. It is overbought from all angles however, it continues to remain so backed by heavy cash inflows from the FIIs. However, so far as retail investors are concerned, it is important to note that the Markets are heavily overdue for an imminent correction as such rise, which is almost similar to “rigging” certainly has now got unhealthy. It might happen that whenever the FIIs are done with their activity and when the correction sets in, once gets badly caught at the extremely higher levels.

Overall, the analysis remains more or less on the similar lines that of yesterday. The Markets would open positive and at the same time, it would carry equal chances of showing much overdue correction. We continue to reiterate our advice to remain extremely stock specific while protecting profit at higher levels. Blanket buying should be avoided and high degree of caution is advised for today.

Milan Vaishnav,

Consulting Technical Analyst,

+91-98250-16331

Wednesday, April 2, 2014

Daily Market Trend Guide -- Wednesday, April 02, 2014

MARKET REPORT April 02, 2014

After remaining subdued for the entire session, the Markets saw some last minute buying and it ended yet another day with modest gains while remaining into overbought territory. The Markets opened on a modestly positive note but soon dipped into the red as it pared its opening gains very swiftly in the initial minutes of the trade. Thereafter, the Markets spent the first half of the session trading absolutely sideways in a capped range hovering around its previous close. It dipped further into the red in the afternoon trade as it formed its day’s low of 6675.45. It saw some recovery coming in it not only recovered its gains but went into positive territory forming the day’s high of 6732.25. It finally ended the day at 6721.05, posting a modest gain of 16.85 points or 0.25% while continuing to form a mildly higher top and higher bottom on the Daily High Low Charts.

MARKET TREND FOR TODAY

Markets remains heavily into “overbought” territory and today it is likely to see modestly positive opening once again. However, as appears from the Charts, though the Markets may see some strength in the opening trade, it is likely to continue to see consolidation from higher levels. The intraday trajectory it forms would be very critical to decide the trend but overall, some consolidation / correction from higher levels is overdue.

For today, the levels of 6745 and 6770 would be immediate resistance levels for the Markets though it continues to trade in uncharted zone. The supports would exist at 6650 and 6610 levels.

The lead indicators continue to remain overbought. The RSI—Relative Strength Index on the Daily Chart is 79.7021 and it has reached its highest value in last 14-days. Though it does not show any bullish or bearish divergence, it remains in extremely “overbought” condition. The Daily MACD trades above its signal line.

On the derivative front, the NIFTY April futures open interest has remained virtually unchanged as it has added a nominal 11,700 shares or 0.07% in Open Interest. This very clearly indicates that there have been no offloading of any positions and also no fresh build up of positions that was seen.

The pattern analysis continue to depict the markets in very much overbought condition as it is very clearly evident on the Daily Charts. The lead indicators continue to remain in extremely overbought condition and any continuation of up move with this pattern would certainly tend to get unhealthy as the correction after that becomes equally or even more sharp.

Overall, the Markets may see positive opening but at the same time, it is likely that we see some minor profit taking towards the end or as we go ahead in the session. Some amount of consolidation / minor correction in the Markets is overdue and such unabated up moves with this condition of lead indicators are making the Markets unhealthy as present. It is advised to avoid creating fresh positions and continue to protect profits at higher levels. Overall, continuance of cautious outlook is advised for today.

Milan Vaishnav,

Consulting Technical Analyst,

+91-98250-16331

Tuesday, April 1, 2014

Daily Market Trend Guide -- Tuesday, April 01, 2014

MARKET REPORT April 01, 2014

Though the Markets ended the day in the green yesterday, it saw some weariness for the first time in last couple of sessions. The Markets opened on a positive note but formed its intraday high of 6730.05 in the early minutes of the trade. Thereafter, for the entire session it remained in downward falling trajectory and kept gradually paring it gains. By afternoon trade it pared all of its opening gains and traded flat. It went on to dip further in the negative and went on to form the day’s low of 6662.40. However, the last hour of the trade saw some recovery from lower levels. The Markets finally ended the day at 6704.20 recovering all of its losses and posting a nominal gain of 8.30 points or 0.12% while forming a higher top and higher bottom on the Daily High Low Charts.

MARKET TREND FOR TODAY

Today, expect the Markets to open again on a modestly positive note and look for directions. However, the trade would remain more or less on similar lines that of yesterday as the Markets are likely to come off after positive opening as we go ahead in the session. The signs of imminent correction appear evident and it would also react to RBI’s credit policy wherein the March CPI is seen around 8.7%.

Today, the levels of 6730 and 6755 would act as immediate resistance for the Markets. The Supports exist at 6650a and 6610 levels.

The lead indicators continue to remain in extremely overbought territory. The RSI—Relative Strength Index on the Daily Chart is 78.8726 and it has reached its highest value in last 14-days. However, it continues to remain in very “overbought” condition. The Daily MACD remains bullish as it trades above its signal line and it is about to enter overbought territory as well.

On the derivative front, NIFTY April futures have added 1.02 lakh shares or 0.61% in Open Interest. This shows no major offloading of positions seen even when the Markets came off from its opening highs.

Going by pattern analysis, the Markets continue to remain in extremely overbought condition. In such cases, even if we see continuation of up move it gets very risky and less sustainable if that happens without any correction or consolidation and especially with the indicators continuing to remain in “overbought” condition. Some amount of correction would be healthy for the Markets.

All and all, the analysis would remain on similar lines that of yesterday and we can see some paring of gains from higher level again. We continue to advice to refrain from making blanket purchase and protect profits at higher levels. Fresh buying should be avoided or should be make extremely selectively. Cautious outlook is advised for today.

Milan Vaishnav,

Consulting Technical Analyst,

+91-98250-16331