Wednesday, August 7, 2013

Daily Market Trend Guide -- Wednesday, August 07, 2013

MARKET REPORT                                                                           August 07, 2013
Yesterday was a terrible session for the Markets as the Markets opened weak, went on to defy the pattern support and moved further down towards its major Double Bottom support to end the day with a significant cut. The Markets opened on a negative note and remained in negative zone and territory throughout the session. The Markets gave its intraday high of 5664.90 and that was the opening levels. The Markets very steadily and consistently kept losing ground throughout the session. It went on to give the day’s low of 5521.80. No major recovery was seen from its lows. The Markets very modestly recovered from those levels and finally ended the day at 5542.25, posting  deep cut of 143.15 points or 2.52% and thus forming a sharply lower top and lower bottom on the Daily High Low Charts.


MARKET TREND FOR TODAY

Today the Markets are expected to open on a positive note and give some technical pullback rally. Today, we have very little to analyse except that the Markets are trading near their Double Bottom Support and if it behaves technically, should take support at these levels. Speaking purely on technical grounds a pullback is now very much overdue and imminent. However, in last couple of sessions, the Markets have been squarely defying the technicals especially with over 90% of its components in oversold levels.

Today, the levels of 5590 and 5640 are immediate resistance on the charts. The immediate supports are 5510 and 5475 levels.

Over and above the Index components in oversold levels, NIFTY too has its lead indicators in oversold territory. The RSI—Relative Strength Index on the Daily Charts is 29.1259 and it trades in oversold territory. It does no show any bullish or bearish divergence. The Daily MACD continues to trade below its signal line. 

On the derivative front, the Markets have added massive 14.55 lakh shares or over 9.54% in Open Interest. This figures are very important as for the fist time in last 7-10 sessions that the Markets have shows addition in the Open Interest figures. This also shows that huge number of shorts have been created in the system yesterday.

It is once again important to note that the FIIs have remained net buyers, though marginally. The majority of the sell figures have come in from the DIIs. On the contrary, in last 2-3 sessions, some amounts of shorts too have been piled up by the FIIs in the derivative segment, especially in the Indices. With the NIFTY too now trading oversold along with BANKNIFTY and both of these indices components, it would be TOTAL DEFIANCE by the Markets if it does not give a sustained pullback or a relief rally.

All and all, the advices stands same as that of yesterday. The Markets have no technical reason to go further down. Shorts should be avoided as short trap can occur at lower levels. If liquidity permits fresh purchases may be made very selectively. Otherwise, existing positions should be maintained as all technical inputs points towards a very long overdue and imminent pullback.

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


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