MARKET REPORT May
30, 2014
The Markets continued to witness corrective pressure on the
expiry day yesterday as it opened negative, remained negative throughout the session
and ended the day with deep losses. The
Markets opened on a modestly negative note and in the morning trade
moved sideways with a downward bias and traded in a capped range. The Markets
continued to drift down while remaining in a falling channel. In the second
half of the session, the Markets saw the selling pressure being intensified as
it went on to drift further down and saw itself forming the day’s low of
7224.40. The Markets did not see any recovery coming in and it finally ended
the day at 7235.65 with a net loss of 94 points or 1.28% while forming a
sharply lower top and lower bottom on the Daily High Low Charts.
MARKET TREND FOR TODAY
Today as well, expect the Markets to open on a flat to mildly
negative note and look for directions. In all likelihood the Markets would
continue to witness corrective actions and is likely to drift lower. If no
direct correction is seen, it may also continue to consolidate in a capped
range with downward bias. The intraday trajectory would continue to remain
critical and some amount of volatility may remain ingrained in the trade.
For today, the levels of 7265 and 7280 would act as
immediate resistance on the Daily Charts. The levels of 7185 and 7120 are
immediate supports for the Markets.
The lead indicators continue to show weariness in the Markets.
The RSI—Relative Strength Index on the Daily Chart is 65.11 and though it is
neutral and shows no bullish or bearish divergences or any failure swings, it
has moved below from being in “oversold territory”. This is bearish for the
immediate short term as any up move may again make the markets overbought. The
Daily MACD continues to trade above its signal line.
On the derivative front, NIFTY witnessed marginally lesser than
average rollovers. Similar was the case with market wide stock rollovers. They
continued to remain marginally lower barring some specific power stocks and
stocks belonging to Adani Group.
Going by the pattern analysis, the Markets is seeing a much
needed correction and if this continues it would be in fact healthy for the
Markets. The Markets are likely to test the double bottom support of 7050 if it
continues to drift in this manner. However, while reaching here, it may
continue to witness intermittent pullbacks but this would be more of
consolidation in a trading band rather than any sustainable up moves.
All and all, with the above mentioned technicals, we
reiterate the focus on maintaining very light exposures in the Markets.
Sectoral out performance would be seen so any dip can be utilized to make very
selective stock specific purchases while protecting any profits on existing
positions. More liquidity should be maintained and cautious outlook should be
continued in the Markets today.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
