MARKET REPORT August
04, 2014
The Markets ended the week on a bearish note as it extended
its down move and ended the day on Friday with losses. The Markets opened on a
negative note however showed quite resilience in the first half of the session.
The Markets, after opening on a lower note, attempted to recover most of its
losses by afternoon trade. However, after this, in the second half of the
session, the bearish sentiment took over and later intensified. The Markets saw
selling pressure coming in and it pared nearly all of its recovery. It later
drifted lower and went on to form day’s low of 7593.90 towards the end of the
session. No major recovery was seen being attempted and it finally ended the
day at 7602.60, posting a loss of 118.70 points or 1.554% while forming a
sharply lower top and lower bottom on the Daily High Low Charts.
MARKET TREND FOR TODAY
Today, we can expect a pullback from the Markets and expect
it to open on buoyant note. It is important to note that we have been reporting
a “Broadening Formation” on the Daily as well as Weekly Charts and this is a
classical reversal formation. Within this formation, the Markets would continue
to post intermittent pullbacks. Today as well, we can expect a positive start
to the Markets.
For today, the levels of 7660 and 7710 would act as
immediate resistance to the Markets. The supports exist at 7574 (50 DMA) and
further down at 7495 levels.
The RSI—Relative Strength Index on the Daily Charts is 46.8887
and it remains neutral with no bearish or bullish divergences or any failure
swings. The Daily MACD stands bearish as it has reported a negative crossover
today and it now trades below its signal line. On the Weekly Charts, RSI has
just crossed below its topping out formation which is bearish. Also, Weekly RSI
has reached tis lowest value in last 14-periods and this is bearish. Further,
RSI has set a new Weekly low whereas NIFTY has not yet and this is clear
Bearish Divergence on the Weekly Charts. The Weekly MACD still remains bullish
trading above its signal line.
On the derivative front, NIFTY August futures have shed 7.44
lakh shares or 5.63% in Open Interest and this is clear indication that
offloading has been seen on Friday’s session and no shorts have been freshly
created.
Going by the pattern analysis, it is clear that the Markets
are undergoing a classical reversal pattern and during this phase, we would see
intermittent pullbacks but this pattern would see a overall bearish implication
in the immediate short term. The volumes would be critical to confirm this
reversal. It would be higher when the Markets pares its gains and relatively
much lower when the Markets would see any intermittent pullbacks.
All and all, positive and strong opening expected today. It
would be important to see if the Markets sustains this opening and capitalizes
on that. Any purchases, if any, should be made selectively. In coming immediate
short term, one will have to rely heavily on individual stock specific
performances. Overall, cautiously positive outlook is advised for today.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
