MARKET REPORT
August 08, 2013
The Markets had a utterly volatile session yesterday with
the NIFTY moving in either direction to ultimately end the day with modest
losses while testing its major Double Bottom Support and continuing to remain
in OVERSOLD zone. The Markets opened on a negative note and soon recorded it’s
day’s low of5486.85 in the morning trade. After forming this bottom, the
Markets attempted to reverse its trade as recovered all of its morning losses
by afternoon, but only to pare that recovery again. However, the Markets saw
another bout of recovery. It went to trade in the positive territory briefly
while forming a intraday high of 5561.45. Again, that recovery too was not
sustained as the Markets gave up those gains again, dipped into the negative
and ended the day at 5519.10, posting a modest loss of 23.15 points or 0.42%
while continuing to form a lower top and lower bottom on the Daily High Low
charts.
MARKET TREND FOR TODAY
Today’s analysis once again remains more or less on similar
grounds that of yesterday. The levels of 5490-5500 levels are the Double Bottom
Support Levels and the behaviour of the Markets vis-à-vis those levels would be
critically important. The chances of the Markets holding on to those levels are
HIGH as they trade in OVERSOLD zone. Further, volatility may remain as today’s
is the last working day of the week, tomorrow being a trading holiday.
For today, the levels of 5561 and 5610 are immediate
resistance levels on the Charts. The supports come in at 5485 and 5460 levels.
The RSI—Relative Strength Index on the Daily Chart is
28.1748 and it has reached its lowest value in last 14-days. However, it
continues to trade in “Oversold” territory and also, it does no show any
bullish or bearish divergences. The Daily MACD continues to trade below its
signal line.
On the derivative front, the NIFTY August futures have shed
over 11.31 lakh shares or 6.77% in Open Interest. The NIFTY PCR stands at 0.95.
The reading of the Markets is fairly clear. The Markets
remains in oversold territory and on its major double bottom support. As
mentioned number of times in our previous editions, over 90% of the Index Components of NIFTY, BankNIFTY and CNX
MIDCAP also continue to trade oversold. There continue to exist large short
positions in the Markets and the Markets are likely to take support at these
levels.
Overall, with the reading of the Markets being oversold
along with majority of its components, there are high chances of a long overdue
and imminent pullback, unless the Markets continue to defy the technicals.
However, it is advised to strictly remain away from creating short positions
and also equally advised to not create aggressive long positions. However, very
selective stock picking may be done. Overall, continuance of cautious outlook
is advised with hope of a long overdue pullback happening any time.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
