MARKET TREND FOR WEDNESDAY, SEPTEMBER 07, 2016
The sustenance of the opening gains played the part as the
Markets perked up even higher to move past 8900 levels to end the day on a
robust note yesterday. We will see some consolidation at higher levels but the
up move still continue to remain intact and inherent strength on the Daily
Charts clearly remain visible. Yesterday the charge was led by Banking and Auto
stocks and after some consolidation that is expected, we will see some
participation coming in from Pharma and IT stocks which will aid the further up
move for the Markets in near term. Today, though opening would be crucial, it
is widely expected that we will see the session trading mostly in a capped
range with very limited downsides, though some volatility will remain
ingrained. The consolidation is likely due to the “overbought” nature of the
Markets.
For today, the levels of 8965 and 8990 will act as likely
resistance levels and the supports are expected to come in at 8910 and 8885
levels.
The RSI—Relative Strength Index on the Daily Chart is 72.6939
and it has reached its highest value in last 14-days which is bullish. It does
not show any bullish or bearish divergence but it now trades in “overbought”
territory. The Daily MACD remains bullish as it continues to trade above its
signal line. On the Candles, a big white candle that has occurred after
a consolidation lends credibility to the fresh up move.
On the Derivative front, the NIFTY September futures have
added over 7.28 lakh shares or 2.20% in Open Interest.
Pattern analysis on the Daily Charts shows a credible fresh
up move after three days of consolidation. It is important to note that the
Markets are now trading in “overbought” territory and this may lead to some
consolidation in the near term. However, the lead indicators supported by F&O
data clearly indicate some more steam that is left in the Markets.
Overall, we may see some consolidation coming in as heavily
overbought sectors like BankNifty and Auto see themselves consolidating their
gains. However, the downsides would remain limited as we will see broader
participation from NIFTY Junior, IT and other stocks which have underperformed.
Overall, there may be some volatility but downsides may remain limited and we
may see the Markets testing 9000-plus levels in coming days.
Milan Vaishnav,
CMT
Technical Analyst
(Research Analyst, SEBI Reg.
No. INH000003341)
Member: Market
Technicians Association, (MTA), USA
Member: Association of Technical Market Analysts,
(ATMA), INDIA
+91-98250-16331
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