Daily Market Trend Guide -- Friday, July 10, 2015

MARKET REPORT                                                                                         July 10, 2015

The Markets remained in corrective mode and ended the day with modest losses after spending the session trading on a flat note and on lower volumes. The Markets saw a good positive start and formed its intraday high of 8400.30 in the early minutes of the trade. The Markets failed to remain above its 200-DMA levels and dipped below it after trading briefly above that. The Markets pared its opening gains and traded into negative in late morning trade. It did manage to recover and trade back into positive territory but it did so very briefly. The Markets slipped in the last hour and half of trade and went on to form the day’s low of 8323. No major recovery was seen from these levels and the Markets finally ended the day at 8328.55, posting a modest loss of 34.50 points or 0.41% while continuing to form lower top and lower bottom on the Daily Bar Charts.

MARKET TREND FOR FRIDAY, JULY 10, 2015

The Markets are expected to open on a modestly positive note and trade positive in the initial trade. The Markets are in consolidation mode and are within its filter of 200-DMA at Close levels and is expected to remain in this range for a while. The Markets are likely to consolidate  with the levels of 200-DMA, i.e. 8384 on the upside. Fresh upsides will only occur above this level and until then, we can expect the Markets to continue to see ranged consolidation. Markets would also react to IIP data coming in evening and also to Inflation figure on Monday.

For today, the levels of 8384 and 8450 would act as important resistance for the Markets. The supports come in at 8300 and 8270 levels.

The RSI—Relative Strength Index on the Daily Chart is 49.6701 and it has reached its lowest value in last 14-days. The RSI has also set a fresh 14-period low but NIFTY has not yet and this is Bearish Divergence. The Daily MACD is bullish as it continues to trade above its signal line.

On the derivative front, NIFTY July futures have shed over 3.20 lakh shares or 1.76% in Open Interest. This shows some unwinding of positions yesterday.

Coming to pattern analysis, the Markets have halted its pullback after failing to move past its 100-DMA. In normal circumstances, it was supposed to consolidate between its 200-DMA and 100-DMA but it has breached its 200-DMA as well. Having said this, it is important to note that it still remains just within the filter of 200-DMA and with today’s positive opening, there are fair chances that the Markets continues to consolidate and shows limited downside risks. However, fresh up move shall occur only after the Markets moves past 8400 levels comprehensively.

All and all, as mentioned, until the Markets moves past 8400-levels, it will continue to consolidate with a mild downside bias. Given this technical structure, it is advised to now restrain fresh purchases and remain away from taking large directional exposures. More liquidity should be maintained and fresh purchases should be curtailed until the directional bias is established. Until then consolidation and mild downside risk would continue. Cautious outlook is advised for today.

Milan Vaishnav,
Consulting Technical Analyst

Af. Member: Market Technicians Association, (MTA), USA
Af. Member: Association of Technical Market Analysts, (ATMA), INDIA
www.EquityResearch.asia
http://milan-vaishnav.blogspot.com

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