Tuesday, July 16, 2013

Daily Market Trend Guide -- Tuesday, July 16, 2013

MARKET REPORT                                                                                                 July 16, 2013
The Markets had a volatile session yesterday, as such on expected lines but it ended the day on modestly positive note after recovering from the day’s lows. Contrary to expectation, the Markets opened on a negative note and soon gave its intraday low of 5980.95 in the early minutes of the trade. However, after this, the Markets kept on gradually recovering from this low point and by afternoon trade, it traded flat. The Markets continued its recovery from its day’s low and went into positive. It went on to give the day’s high of 6038.20 by late afternoon trade. The Markets traded sideways for the rest of the session maintaining the gains. It ended the day at 6030.80, posting a modest gain of 21.80 points or 0.36% while forming a higher top and higher bottom on the Daily High Low charts.


MARKET TREND FOR TODAY

The Markets, even with the global markets trading flat to mildly positive, are likely to see a negative opening today. This would be a knee jerk reaction to the RBI’s announcement post market hours yesterday wherein it recalibrated the Marginal Standing Facility at 10.25% to curb the Rupee market volatility. This has put an end to any rate cut hope in the near future.

For today, the levels of the 50-DMA, i.e. 5917 would act as support. The Markets, if opens lower, and drifts lower, this would act as support. However, this should be more of the knee jerk reaction to this development.

The lead indictors continue to remain in place. The RSI—Relative Strength Index on the Daily Chart is 61.4857 and it has reached its highest value 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, NIFTY has continued to add over 3.23 lakh shares or 1.83% in Open Interest.

Having said this, it is important to note that the Markets have recovered over nearly 450-odd points after it made lows in the last week of June after a brief consolidating period in between. The Markets were headed towards it s pattern resistance of 6095-6100 wherein it were expected to consolidate again. However, the RBI’s announcement is likely to put a break on it midway and this would be a non-technical factor would affect sentiments for the immediate short term and will send the Markets for a knee jerk reaction.

Overall, even with lower opening, it would be around its important supports and there would be no breach on the technicals. Also, this would  be more like knee jerk reaction for the short term. In such circumstances, the Markets do tend to defy technicals, but ultimately the technicals tend to take over. There are chances that the Markets either trades sideways post opening or might improve a bit as well. We strictly advice you to avoid shorts if the Markets open lower. Any dip should be utilized to make selective purchases as selective out performance would be seen.  However, cautious outlook is advised for today.

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



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