Friday, May 16, 2014

Daily Market Trend Guide -- Friday, May 16, 2014

MARKET REPORT                                                                                   May 16, 2016
Markets continued to close  at their new lifetime high yesterday but the session also remained somewhat dominated with consolidation ahead of election results today. The Markets opened on a positive but quiet note but soon strengthened further. In the morning trade, the Markets went on to strengthened further as it gave its intraday high  of 7152.55. However, from the late morning trade the Markets saw itself paring all of its gains and at one point of time traded flat. In the afternoon trade, the Markets also went on to dip into negative to form the day’s low of 7082.55 coming off nearly 70-odd points from its day’s high. The Markets in the second half continued to trade in a  capped range and finally ended the day at 7123.15, posting a gain of 14.40 points or 0.20% while forming a higher top and nearly similar bottom on the Daily High Low Charts.


MARKET TREND FOR TODAY

After forming a lifetime high of 7172, the Markets have been severely consolidating since last two sessions. Today, we can expect a modestly negative start to the Markets but given the election results today, the volatility is expected to remain at its extremely today with the Markets likely to swing in both directions due to highly speculative reasons.

The levels of 7172 and 7225 would act as immediate resistance for the Markets today. The supports exist much lower at 7065 and 6975 levels.

The RSI—Relative Strength Index on the Daily Chart is 76.6909 and it has reached its highest levels in last 14-days which is bullish. However it continues to trade in “OVERBOUGHT” territory and it does not show any bullish or bearish divergence either. The Daily MACD continues to trade above its signal line. 

On the derivative front, the NIFTY May futures have another 9.13 lakh shares or 5.37% in Open Interest. This signifies creation of fresh longs in NIFTY Futures. However, there has been net shedding of Open Interest in stocks futures that has been reported across key stocks.

Going only by the pattern analysis, the Markets are trading deeply “Overbought” and some amount of further consolidation or minor profit taking cannot be ruled out, but in fact it is long overdue and imminent. However, give the election results today, all such analysis normally takes a back seat and the Markets normally reacts to such developments in absolutely volatile and wild manner.

Given the elections results today, as mentioned earlier, the Markets are set to witness extreme volatility on either side. It is strongly advised to refrain from taking over leverage and larger exposure in the Markets. Retail investors / traders should wait for the trend of the Markets to get clear and then start taking moderate positions. Overall, high degree of caution should be continued to be exercised for today as well.

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


Thursday, May 15, 2014

Daily Market Trend Guide -- Thursday, May 15, 2014

MARKET REPORT                                                                                  May 15, 2014
The Markets which are now habituated with creating new records every day, created a another record yesterday, though of a different kind. After nine years, i.e. after 1st June 2005, it was first time that the NIFTY closed unchanged. The Markets opened on a very quiet note yesterday as expected and soon formed its intraday high of 7142.25 in the first hour of the trade. However, the Markets then consolidated for the rest of the session and remained capped in 20-odd points range on either side. The Markets soon pared all of its gains and by afternoon trade traded absolutely flat. It later dipped into the red while it formed its intraday low of 7080.60. It recovered a bit from those levels and closed exactly at it previous close of 7108.75 while forming a lower top and higher bottom on the Daily High Low Charts.


MARKET TREND FOR TODAY

The election results are coming out tomorrow and today as well, the Markets are likely to see a quiet opening and are likely to continue to consolidate at higher levels. Though intraday trajectory would continue to remain critically important the overall analysis continues to remain same as that of yesterday. There are chances that the Markets see some profit booking before the event tomorrow.

For today, the levels of 7140 and 7172 would act as resistance. The supports exist much lower at 7020 and 6940 levels.

The RSI—Relative Strength Index on the Daily Chart is 76.1713 and it has reached its highest level in last 14-days which is bullish. It does not show any bullish or bearish divergence. The Daily MACD remains bullish as it continues to trade above it signal line. On Candles, a spinning top has occurred. This indicates a potential top formation.

On the derivative front, the NIFTY May futures have added another 10.13 lakh shares or 6.33% in Open Interest.

Going by the pattern analysis, the Markets now continue to trade in “Overbought” territory and there are signs of a potential top formation at 7172 levels. Before the election results come out the Markets may either consolidate in a given range with 7172 acting as its potential top OR might see some profit taking ahead of the event.

Overall, we continue with our advice of remaining moderate with the positions. Shorts should be avoided but any up move should be utilized to protect any existing profits. Any fresh positions should be taken moderately and heavy exposures and leverage should be strictly avoided. While maintain moderate exposures, continuance of high degree of caution is advised for today.

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


Wednesday, May 14, 2014

Daily Market Trend Guide -- Wednesday, May 14, 2014

MARKET REPORT                                                                                  May 14, 2014
The Markets continued its upsurge on the third day in a row and ended with yet another decent gain with a record high closing but at the same time showed first signs of little tiredness as it came off from its intraday highs before closing. The Markets opened on a positive note and as it had been doing in previous two sessions, continued to surge upwards while making new intraday highs and remaining in upward rising trajectory. The Markets went on to give a fresh record high of 7172.35 in the afternoon session. However, the Markets started seeing some profit taking from these levels. It retraced from these levels in the second half of the session. It came off near 65-odd points from its day’s high. The Markets finally ended the day at 7108.75, still posting a decent net gain of 94.50 points or 1.35% while forming a sharply higher top and higher bottom on the Daily High Low Charts.


MARKET TREND FOR TODAY

The Markets have closed yesterday after coming off from their intraday highs and therefore might have potentially formed a temporary top at that levels. The Markets may open on a quiet or modestly positive note and move upwards in the initial trade but yesterday’s high level might pose a temporary resistance to the Markets. Though intraday trajectory remains critically important and so are the FII cash inflows, there are chances that the Markets show some sign of profit taking from current levels.

Today, the level of 7172 is likely to act as resistance. The supports now exist much lower at 7040 and 6980 levels.

The RSI—Relative Strength Index on the Daily Chart is 73.1713 and it has reached its highest level in last 14-days which is bullish. It does not show any bullish or bearish divergence. The Daily MACD continues to remain bullish as it trades above its signal line.

On the derivative front, the NIFTY May futures have added nearly 10.34 lakh shares or 6.91% in Open Interest. This very clearly signifies that fresh buying in the Markets have continued unabated.

Going by the pattern analysis, the Markets now continue to trade very much in “OVERBOUGHT” territory. Also, the last three trading sessions have resulted in gains of over 450-NIFTY points and there are bright chances that the Markets see some correction / profit taking setting in. This profit taking may not be across the Markets but certainly it can remain sector specific. Some sectors which have run up too hard might witness some profit taking at higher levels.

All and all, nearing actually election results, the volatility in the Markets is expected to remain and even increase. We continue to reiterate to use this fantastic up move to book profits on long positions wherever possible. Shorts, however, should be avoided and any fresh position should be taken extremely selectively. We continue to advice to remain moderate on market exposure and maintain high degree of caution in the Markets.

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


Tuesday, May 13, 2014

Daily Market Trend Guide -- Tuesday, May 13, 2014

MARKET REPORT                                                                                May 13, 2014
The markets continued with its upsurge in yesterday’s session as well as it opened positive and remained strong throughout the session to end the day with yet another robust gains. The Markets opened on a positive note and remained in upward rising trajectory throughout the session while it continued to report new intraday highs. It went on to cross the 7000-mark as it formed its intraday high of 7020.05 towards the end of the session. The Markets successfully maintained its gains until the end and finally ended the day at 7014.25, a fresh lifetime high, posting a robust gain of 155.45 points or 2.27% while forming a higher top and higher bottom on the Daily High Low Charts.


MARKET TREND FOR TODAY

Even though the markets have again become overbought, it will continue to witness the volatile upsurge, though now on little dangerous and unhealthy manner. The reason for this is the expected NDA victory from all the exit polls (though exit polls have been miserably wrong in 2004 and 2009). The Markets are likely to react to this and on the other hand it would also react to the IIP and CPI numbers which are not at all encouraging.

For today, the Markets would continue to trade in uncharted territory and therefore the possible resistance levels can be 7050 and 7065 and the supports would exist very low at 6905 and 6850 levels.

The RSI—Relative Strength Index on the Daily Chart is 72.7310 and it has reached its highest value in last 14-days which is Bullish. On the other hand, it has also entered the “overbought” territory. It does not show any bullish or bearish divergence. The Daily MACD has now reported a positive crossover and it trades above its signal line. 

On the derivative front, the NIFTY May futures have added over 4.32 lakh shares or 2.98% in Open Interest. This shows that fresh buying continued. The Market breadth however remained negative slightly favoring the declines. 

Going only by the pattern analysis, if the Markets continue to surge upwards, it would not get unhealthy and dangerous by all means. Agreed that the Markets reacting to the positive electoral sentiments and this is backed by massive cash inflows but the Markets need to consolidate a bit before resuming its up move. ALSO, the markets should and will take into consideration the IIP and CPI data, which is not encouraging at all, if not today than incoming sessions. This greatly reduces any immediate rate cut by RBI as inflation has continued to remain high.

All and all, going by this, even if the Markets now continue with their up moves, we strongly recommend that exposures should be curtailed to very moderate levels. Any fresh purchases, if any should be curtailed to defensives as some volatile and intermittent corrections just cannot be ruled out. Overall, while remaining very moderate on exposures, very high degree of caution is advised for today.

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