Thursday, July 31, 2014

Daily Market Trend Guide -- Thursday, July 31, 2014

MARKET REPORT                                                                                              July 31, 2014
What seemed to be a session of one more correction turned out to be positive one for the Markets as it saw a rally in the second half of the session and ended the day with modest gains. The Markets opened a modestly negative note and it drifted in a sideways manner in the morning trade while trading with capped gains. It drifted lower by afternoon trade while it touched its day’s low of 7707.60. Just when it seemed the correction could widen, the Markets saw a sharp spurt from lower levels. It not only recovered all of its losses but also traded in  the positive territory. It went to form a day’s high of 7798.70. After hovering around those levels, it finally ended the day at 7791.40, posting a net gain of 42.70 points or 0.55% while forming a similar top and lower bottom on the Daily High Low Charts.


MARKET TREND FOR TODAY

Today is the expiry day of the current derivative series and expect the Markets to remain dominated with rollover activities. The Markets are expected to open on a flat and quiet note and look for directions. Due to expiry, some volatility may remain and the intraday trajectory would be important for the Markets to decide the trend. It may be noted that the Markets are witnessing a formation of a pattern called Broadening Formation.

Today, the levels of 7820 and 7860 would act as immediate resistance for the Markets. The supports would come in at 7680 and 7640 levels.

The RSI—Relative Strength Index on the Daily Chart is 61.9023 and it is neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD remains bullish as it trades above its signal line.

On the derivative front, the NIFTY July futures have shed over 22.65 lakh shares or 18.97% in Open Interest whereas the August futures added 37.06 lakh shares or 59.39% in Open Interest.

Going by pattern analysis, as evident from the  Daily Charts, the Markets are witnessing formation of a pattern called “Broadening Formation”. This often exhibits a top which is higher than its preceding top and a bottom lower than its preceding bottom. This means that the Markets may continue to witness advances but may see no runaway rise and it has overall bearish implication in the immediate short term.

Overall, going by this reading, it is strongly advised to keep booking and protecting profits at higher levels. More attention should be paid to booking profits and fresh purchases should be kept very limited and stock specific. Overall, while maintaining more liquidity and less of exposure, cautious outlook is advised for today.

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


No comments:

Post a Comment

Note: Only a member of this blog may post a comment.