Friday, August 3, 2012

Daily Market Trend Guide -- Friday, August 03, 2012

MARKET TREND FOR TODAY                                                           August 3, 2012
After four days of ending with gains the Markets today took some breather as it continued to consolidate and ended with minor losses on expected lines. The Markets opened moderately lower and continued to drift as it gave its intraday low of 5209.95 in the afternoon trade. Thereafter, it did see some recovery and came considerably off its morning lows. The Markets made an attempt to recover  and at one time came almost to its previous close levels. It finally ended the day at 5227.75, posting a minor loss of 12.75 points or 0.24%. The sessions remained in a very capped range and the Markets formed a slightly lower top and slightly lower bottom on the Daily High Low charts. The volumes remained around the average.

Today, expect the Markets to open on a moderately negative note and look for directions. The Markets are expected to continue to see minor correction and thus the intraday trajectory would be important. The  volumes too would be critical. Yesterday’s volumes have remained much below average.

The levels of 5265 and 5280 are immediate  resistance levels on the charts and the levels of 5201 and 5185 are immediate supports.

The RSI—Relative Strength Index on the Daily Charts is 54.73 and it shows no negative divergence or failure swings. The Daily MACD continues to trade below its signal line.

The NIFTY and Stock Futures have added 2.8 lakh shares and 1 Crore shares respectively in Total Open Interest. In yesterday’s session, the important thing to note is that with the minor correction that we saw, there has been significant drop in the volumes. This is a positive factor. Today also, if the Markets continue to see minor correction, the volumes are expected to be on the lower side. The intraday trajectory too would be important. The NIFTY PCR stood unchanged at 1.11 yesterday.

Overall, it would be perfectly fine if the Markets continues to see some minor correction. However, this would still not be the Market to Short aggressively. In the immediate short term perspective, there is no negative breach on the Chart. The 50-DMA has cut  200-DMA from below giving a positive crossover. This is bullish in the immediate short term.

All and all, it would be perfectly healthy for the Markets if it sees some correction, though a minor one, one much lower volumes. This will make it sustainable for the further up move as the overall set up looks positive. With every such minor corrections, selective purchases should be made. Profits too should be protected on either side. Overall, positive outlook is advised as undercurrent remains intact.

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

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