MARKET REPORT
July 01, 2013
The Markets saw a very sharp and strong continuation of
pullback of Friday as well, in fact much stronger as expected as it opened
higher and sustained and strengthened its gains to end the day with robust
gains. The Markets opened on a positive and strong note on Friday and remained
in upward rising trajectory for the entire session. There was no part of the
day the Markets saw any pressure coming it. The sharp pullback was not only
attributed to sharp short covering but these shorts were also largely seen
being replaced with fresh longs. The Markets went on to move past its 200-DMA
and 100-DMA as well and gave its intraday high of 5852.95. After hovering
around those levels for a while, it finally ended the day at 5842.20, posting a
robust gain of 159.85 points or 2.81% while forming a sharply higher top and
higher bottom on the Daily High Low Charts.
MARKET TREND FOR TODAY
Markets have risen over 260-odd points from the Thursday’s
intraday lows to give two days of a very smart pullback. There are fair chances
that he Markets consolidates for a while now. Today, expect the Markets to open
on a flat to mildly positive note and look for directions. The intraday
trajectory would continue to remain important. The Markets may consolidate
between its two DMAs, 100 and 200.
For today, the levels of 5875 and 5910 would act as
immediate resistance on the Daily Charts. On the downside, 5848 and 5821 which
is the 200-DMA should act as support. Below this, the supports come in at 5775.
The lead indicators indicate continuation of bullish trend in the
Markets. The RSI—Relative Strength Index on the Daily Chart is 52.2230 and it
has reached its highest value in last 14-days which is bullish. Further to
this, the RSI has set a new 14-day high while NIFTY has not yet. This is
Bullish Divergence. The Daily MACD remains bearish as it trades below its
signal line, but is moving towards reporting a positive crossover. On the
Candles, A rising window occurred (where the top of the previous shadow is
below the bottom of the current shadow).
This usually implies a continuation of a bullish trend. There have been 4 rising windows in
the last 50 candles--this makes the current rising window even more
bullish.
On the Weekly Charts, RSI is 50.5896 and remains neutral
with no divergences or failure swings. The Weekly MACD too remain bearish as it
trades below its signal line but moving towards reporting a positive crossover.
On the Weekly Candles, An engulfing bullish line occurred (where a white candle's
real body completely contains the previous black candle's real body). The engulfing bullish pattern is
bullish during a downtrend (which appears to be the case with NIFTY). It then signifies that the momentum may be
shifting from the bears to the bulls.
On the derivative front,
NIFTY July futures have added over 24.16 lakh shares or over massive 20.27% in
Open Interest. This is very important indicator which show that not only there
was a sharp short covering, but the same was being replaced with fresh longs.
All and all, with over
260-odd points of rise in last two days, there are chances that the market
consolidates for a day or so. However, in any case, this would be healthy
behaviour, even if its consolidates as this makes the rise sustainable and
healthy in the long run. Also such behaviour of the Markets would set the
grounds for further up move.
Overall, positive opening
expected and the Markets may continue with its pullback. However, even if it
consolidates, it would be healthy as mentioned above. Even if the Markets have
risen over 260-odd points in last two sessions, we continue to strictly advise
against creating any short positions. While fresh longs may be made, existing
positions maybe held on to. Positive outlook is advised as undertone remains
strong and bullish even if mild consolidation is seen.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
