MARKET REPORT July
07, 2014
The Markets once again saw a remarkable recovery in the
second half of the session on Friday as the Markets recovered nearly 80-odd
points from the lows of the day to end the day with modest gains. The Markets
opened on a quietly positive note and after moving sideways with minor gains in
the morning drifted slowly in to the red. The Markets saw some further pressure
coming in by afternoon trade and it went on to slip further and form the day’s
low of 7661.30, dropping well below critical 7700-levels. However, the second
half of the session saw a smart recovery as the Markets reversed its trend and
started to recover from its lows. The Markets not only recouped all of its
losses but went on to trade back into positive territory. It went on to form
the day’s high towards the end of the session at 7758. It finally ended the day
at 7751.60, posting a modest gain of 36.80 points or 0.48% while forming a nearly
similar top but lower bottom on the Daily High Low Charts.
MARKET TREND FOR TODAY
Today, expect the Markets to open on a flat note and look
for directions. Since there is no directional bias since last two sessions on
Close Charts, the analysis remains once again on similar lines as that of
Friday. The Markets behaviour vis-a-vis the levels of 7700 would be critically
important. So long as the Markets maintains itself above this level, we will
see some consolidation happening. Any drift below 7700 levels will see the
Markets getting somewhat weaker.
For today, the levels of 7760 and 7790 would act as
resistance levels and the levels of 7700 and 7630 would act as immediate
support.
The lead indicators continue to maintain a negative bias. The
RSI—Relative Strength Index on the Daily Chart is 68.9255 and it does not show
any failure swings. However, the NIFTY has formed a new 14-period high whereas
the RSI has not yet and this is Bearish Divergence. The Daily MACD continues to
remain bearish as it trades below its signal line. On the Weekly Chart, RSI is 78.1730 and show
a clear Bearish Divergence. The Weekly
MACD remains in “overbought” range.
Study of pattern analysis clear show that the Markets
attempted a clear breakout above 7700 levels but did not confirm it by moving
past that level significantly. However, it has consolidated around those
levels. It is clear that the behaviour of the Markets as against 7700 levels
would be crucial as any dip below that would induce short term weakness in the
Markets. Further, looking at the lead indicators on the Daily as well as Weekly
Charts, the chances of Markets going for a breakout are grim.
Going by the above, we continue to reiterate the policy of
very controlled and minimum leverage in the Markets. Any purchase, if made,
should be limited to defensives only. Profits should be vigilantly protected on
the upside. Overall, continuance of cautious outlook is advised for today.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
