Friday, April 25, 2014

Daily Market Trend Guide -- Friday, April 25, 2014

MARKET REPORT                                                                                 April 25, 2014
The expiry of the April series happened on Wednesday as yesterday was a trading holiday on account of voting in Mumbai constituencies. On Wednesday, the Markets saw a positive opening and remained positive throughout the session. After opening positive, the Markets kept inching upwards and formed its day’s high of 6861.60 in the afternoon trade taking the Markets to its fresh lifetime highs. However, the second half of the session saw the Markets paring most of its gains and traded nearly flat in the last hour of the trade. The Markets saw a sharp up move in the last 30 minutes of the trade, in a spurt that is very typical to short covering and expiry led trades. The Markets finally ended the day at 6840.80, posting a net gain of 25.45 points or 0.37% while forming a higher top and higher bottom on the Daily High Low Charts.


MARKET TREND FOR TODAY

Markets are yet to achieve a clear breakout from its critical zone and it now trades nearly overbought. Today, expect the Markets to open on a modestly negative note and look for directions. The Markets are likely to see some minor correction  / weakness at least in the initial trade. The intraday trajectory that it forms would be critically important and the Markets are likely to see some minor paring of gains.

For today, the levels of 6840 and 6865 would act as immediate resistance for the Markets. The supports come in much lower at 6740 and 6710 levels.

The lead indicators trade very near to its overbought zone. The RSI—Relative Strength Index on the Daily Chart is 69.7402 and it does not show any failure swings. The Markets have set a new 14-day high but the RSI has not yet and this is clear Bearish Divergence. The Daily MACD too remains bearish as it trades below its signal line. 

On the derivative front, the action very clearly reflected high degree of caution among traders. Though the Marketwide rollovers have been in line with the average, the NIFTY rollovers have remained much lower than its 3-month average. This signifies that the traders have put up a very cautious face.

Going by the pattern analysis, the Markets traded in a trading zone of 6650-6820 levels and then has since attempted a breakout. However, there has been no clear breakout from this broad range. The Markets are not likely to give a clear breakout from this range and we might see the Markets entering some minor correction range.

All and all, the Markets are showing some signs of weariness and there are bright chances that the Markets see some correction in the immediate short term. Any upside would be more of short covering lead and will take the Markets into “overbought” territory. It is advised that traders should maintain lighter positions in the Markets. Shorts should be avoided and very selective purchases may be made on dips. Overall, moderate exposure with cautious outlook is advised for today.

Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331


Wednesday, April 23, 2014

Daily Market Trend Guide -- Wednesday, April 23, 2014

MARKET REPORT                                                                                     April 23, 2014
Markets did not give a fresh break out yesterday, quite on expected lines as it spent the day in a very narrow and capped range to end the day flat with very minor losses. The Markets opened on a flat and quiet note and moved up in the first 30 minutes of the trade to post the day’s high of 6838. However, after this, the Markets remained in downward falling channel all throughout the session but this channel remained very narrow as the Markets kept moving in a very narrow 20-odd point band. In the afternoon trade, the Markets pared all of its gains and traded negative. It recovered a bit but once again dipped into negative in the late afternoon trade. It finally ended the day at 6815.35, posting a net loss of 2.30 points or 0.03% while forming a mildly higher top and higher bottom on the Daily High Low Charts.


MARKET TREND FOR TODAY

Today we enter the expiry day of the current derivative series as tomorrow would  be a trading holiday on account of voting in Maharashtra. Therefore, the expiry would happen today. Today, we can expect the Markets to open again on a quiet and flat note and look for directions. The session would remain heavily dominated with rollover centric activities and there are little chances that the Markets will achieve fresh breakout today.

For today, the levels of 6840 and 6865 would act as immediate resistance on the Daily Charts. The supports exist much lower at 6755 and 6710 levels.

The RSI—Relative Strength Index on the Daily Chart is 68.0820 and it is neutral as it shows no bullish or bearish divergence or any kind of failure swings. The Daily MACD continues to remain bearish as it trades above its signal line. 

On the derivative charts, the NIFTY futures have shown a net decline in total open positions. This implies that the profit taking / unwinding of some positions have continued. This also becomes evident from the fact that both NIFTY and market wide rollovers have been on the lower side of the 3 month average.

Going by the pattern analysis, the Markets have not yet given a fresh break out on the upside. From the reading above, it is also less likely that the Markets shall give a fresh break out today. It would move very swiftly towards “overbought” category with any fresh up move and the lead indicators too look little weary on the Daily Charts.

All and all, given these facts, it is likely that the Markets see a subdued opening and the session remains dominated with rollover activities. There are also chances that the session remains ingrained with volatility and we might see some paring of positions as well. We continue to advise to have moderate exposure in the Markets while adopting a cautious outlook for today.

Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331


Tuesday, April 22, 2014

Daily Market Trend Guide -- Tuesday, April 22, 2014

MARKET REPORT                                                                                      April 22, 2014
The Markets displayed a similar pattern in yesterday’s trade as well as it spent the most part of the session in a very narrow and ranged movement but saw spurt led by short covering to end the day with gains. The Markets opened on a modestly positive and quiet note and it spent the most part of the session in a very narrow 20-odd points range. After trading in sideward trajectory until late afternoon trade, the Markets saw a sharp up move in last hour and half of the trade as it went on to form the day’s high of 6825.45. The Markets came off a bit from those levels and finally ended the day at 6817.65, posting a net gain of 38.25 points or 0.56% while forming a higher top and higher bottom on the Daily High Low Charts.


MARKET TREND FOR TODAY

Markets  gave a fresh closing high yesterday and today, we are again set to see a mildly positive and quiet opening. Apart from global cues, we enter the penultimate day of expiry of current derivative series and therefore, the session is certainly set to remain dominated with rollover centric activities. The Markets may attempt to give a fresh break out on the upside but the sustainability of that breakout would be in question and the Markets may continue to remain in consolidation stage for some more time.

For today, the Markets might trade in uncharted territory with likely resistance at 6830 and 6855 levels. Supports exist much lower at 6770 and 6710 levels.

The lead indicators show some lack of strength required for the breakout. The RSI—Relative Strength Index on the Daily Chart is 68.3965 and it does not show any failure swings. However, NIFTY has reached its highest level in last 14-period whereas the RSI has not and this is a clear Bearish Divergence. The Daily MACD continues to remain bearish as it trades below its signal line. 

On the derivative front, the NIFTY has shed total of 10.60 lakh shares in total open interest. This is once again a clear indication that the Markets have shown heavy short covering from the current levels as no major purchases were witnessed. Further to this, total NIFTY and market wide rollovers too have remained below its 3 month average.

Going by the pattern analysis, the Markets are yet to give a clear breakout on the upside. However, again with any fresh breakout on the upside, the Markets will again turn “overbought” and also, the F&O data suggests that the Markets may not achieve fresh break out and if at all it achieves, it can be little less sustainable. 

All and all, we still continue to advise to refrain from creating excessive exposure in the Markets. While avoiding shorts, exposure should be kept moderate and any downside should be used in making very selective purchases. Overall, mild positions with moderate caution is advised for today.

Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331



Monday, April 21, 2014

Daily Market Trend Guide -- Monday, April 21, 2014

MARKET REPORT                                                                                     April 21, 2014
The Markets on Thursday (Friday was a trading holiday on account of Good Friday) saw a huge spate of short covering as it ended the day with robust gains. The Markets opened on a modestly positive note and after briefly trading in a capped range surged higher in the late morning trade. The Markets once again continued to trade in sideward trajectory while maintaining those gains. The late afternoon trade saw the Markets gaining further strength as it surged even higher. It went on to post the day’s high of 6783.05 in the last minutes of the trade. The Markets maintained those levels and finally ended the day at 6779.40, posting a robust gain of 104.10 points or 1.56% while forming a higher top and higher bottom on the Daily High Low Charts.


MARKET TREND FOR TODAY

The Markets shall open today after 3 days of slumber as it remained closed on Friday. Today, expect the Markets to open on a very flat note and look for directions. This week too is a truncated week with the Markets remaining closed on 24th April due to voting for General Elections. Resultantly, the expiry shall happen on Wednesday. Given the expiry week, and that too short and truncated, the Markets would remain dominated with rollovers and there are bright chances that it does not give a clear breakout on the up side.

For today, the levels of 6825 and 6840 would act as immediate resistance levels for the Markets. The supports exists much lower at 6720 and 6675 levels.

The RSI—Relative Strength Index on the Daily Charts is 65.9687 and it is neutral as it shows no bullish or bearish divergence or any failure swing. The Daily MACD continues to remain bearish as it trades below it signal line. 

On the derivative front, the NIFTY April futures have shed over 4.44 lakh shares or 2.83% in Open Interest. This very clearly signifies that the Markets have seen huge amount of short covering on Thursday. It needs to be seen if this gets replaced with fresh buying. This is the factor that may prevent the Markets from proceeding for a fresh breakout on the Daily Charts.

Going by the pattern analysis, the Markets have not yet given a breakout on the upside even after Thursday’s up move. There are chances that the markets deliberates little more before it proceeds for a breakout. This reading is further validated with the F&O data which shows across the board reduction in Open Interest  which very clearly indicates that the rally that we saw on Thursday was more on account of short covering and not on fresh buying. It would be critically important to see if this gets replaced with fresh buying in the coming session.

All and all, this week would remain cautious as the Markets would again see a truncated week, with a expiry happening a day earlier. It is strongly advised that one should refrain from fresh buying until a fresh and clear breakout is achieved. Only selective and stock specific purchases should be made while avoiding shorts. While remaining moderate on positions, cautious outlook is advised for today.

Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331